NCOC seeks arbitration over sulphur fine

The North Caspian Operating Company (NCOC), which operates the huge Kashagan oil field in Kazakhstan, has said that it is seeking international arbitration to resolve its ongoing dispute with the government of Kazakhstan. Kazakhstan has imposed a swingeing $4.6 billion fine for alleged violations of sulphur storage regulations at the NCOC site. In December, a special administrative court in Astana turned down an appeal by NCOC, although it also granted leave to appeal in a higher court. NCOC, a partnership between Shell, Eni, TotalEnergies, ExxonMobil, China National Petroleum Corporation, Inpex and Kazakh state oil and gas company KazMunayGaz, continues to maintain that its sulphur handling operations have been conducted in compliance with Kazakhstan’s laws and that it had the required permits in place.

“We consider that Kazakhstan’s conduct in relation to the alleged permit violation for the storage of sulphur is not meeting the country’s obligations under international investment treaties, including its obligation to afford fair and equitable treatment to their investors,” NCOC said in a statement. “Despite disputing the allegations, and attempting to resolve these issues through dialogue, these efforts have not resulted in a solution. Therefore, the international shareholders have concluded that they have no choice but to initiate a request for arbitration under international treaties.”