Oil majors running Kazakh Kashagan field file arbitration over $4.6 billion fine

LONDON, Feb 25 (Reuters) - Shell SHEL.L, TotalEnergies TTEF.PA, Eni ENI.MI, Exxon XOM.N and other shareholders in Kazakhstan's Kashagan oilfield have filed an arbitration claim against a 2023 environmental fine worth around $4.6 billion, the consortium said on Tuesday, the latest in a growing web of complex legal disputes in the country's hydrocarbon industry.

In early 2023, Kazakhstan's government fined the consortium known as NCOC 2.3 trillion tenge - then worth $5.4 billion - for ecological violations related to an inspection the year before of Kashagan's gas processing facilities when the authorities said they discovered excessive volumes of poisonous sulphur at the site.

NCOC also includes KazMunayGas, Japan's Inpex 1605.T and China's CNPC [RIC:RIC:CNPET.UL].

Kazakhstan has clashed for years with international oil companies over costs, bringing multi-billion-dollar claims against them. Shell CEO Wael Sawan said this month the group would pause further investment in the country due to the legal disputes.

"We consider that the Republic’s conduct in relation to an alleged permit violation for the storage of sulphur is not meeting the Republic’s obligations under international investment treaties, including its obligation to afford fair and equitable treatment to their investors," NCOC said in an emailed statement.

"NCOC’s sulphur handling operations have been conducted in compliance with the laws of Kazakhstan, and NCOC had the required permits in place... The international shareholders have concluded that they have no choice but to initiate a request for arbitration."

A Shell spokesperson confirmed the move for arbitration. Eni and Inpex declined to comment. The other NCOC shareholders did not immediately respond to a request for comment.

($1 = 497.2900 tenge)