Foreign companies developing the Kashagan field must pay Kazakhstan a 2.3 trillion tenge environmental fine by July 20, or the republic will begin forced collection proceedings, Vice Minister of Justice Daniel Vaisov said at a briefing at the Central Communications Service, according to infohub.kz.
Vaisov said the dispute concerns violations of environmental legislation. The court decision has entered into force, and if the foreign companies do not pay the fine by July 20, Kazakhstan will launch enforcement proceedings and apply measures of forced collection.
At the same time, the Kashagan operators are challenging Kazakhstan's actions in international arbitration. The contractors have filed a claim with the International Centre for Settlement of Investment Disputes (ICSID) in Washington. The composition of the arbitration tribunal is currently being formed, expected by the end of July.
The briefing also touched on an arbitration dispute with shareholders of the Karachaganak project. According to Vaisov, it concerns a breach of commercial terms in the Production Sharing Agreement. Details are confidential, but the Ministry of Justice is satisfied with the progress of the proceedings.
The environmental claims arose after a 2022 inspection by the Ecology Department of Atyrau Region. The field contained about 1.7 million tons of sulfur against a permitted 773,000 tons, forming the basis for a 2.356 trillion tenge fine. The dispute has lasted several years, with court decisions and appeals. In June 2025, the Supreme Court overturned one ruling, and then the appellate instance again annulled the department’s act due to procedural violations. After the deficiencies were addressed, the fine was re-imposed in late August 2025.
In late March 2026, the vice minister reported that a first-instance court had ruled in favor of Kazakhstan, and the companies appealed. Simultaneously, international arbitration was initiated under investment agreements with France and the Netherlands. Now, the Kazakh court decision has taken effect, and the companies are required to pay the fine.
In February 2026, the participating companies filed a claim against the government in international arbitration. North Caspian Operating Company (NCOC) states that it has complied with all requirements and permits regarding sulfur handling and disputes the claims.
Kashagan is one of the largest oil fields discovered in recent decades. Located in the northern part of the Caspian Sea, it entered commercial production in 2016. NCOC shareholders include KMG Kashagan B.V. (16.877%), Shell Kazakhstan Development B.V. (16.807%), Total EP Kazakhstan (16.807%), Agip Caspian Sea B.V. (16.807%), ExxonMobil Kazakhstan Inc. (16.807%), CNPC Kazakhstan B.V. (8.333%), and Inpex North Caspian Sea Ltd. (7.563%). Total investment in the project is estimated at approximately $60 billion.