Kazakh court fines gas field over flaring

ALMATY, March 20 (Reuters) – A court in Kazakhstan has fined a group of Western energy majors developing the huge Karachaganak gas field $15 million for environmental damages, a consortium spokesman said on Thursday.

The Kazakh authorities have accused the Karachaganak Petroleum Operating (KPO) consortium of unauthorised gas flaring at Karachaganak. KPO has denied any wrongdoing and said it would challenge the March 18 ruling.

“KPO believes the company has fulfilled all requirements set by Kazakh law with regard to providing complete tax and ecological reports, and intends to defend its position in Kazakh courts,” the spokesman said.

The fine, though small, is likely to alarm foreign investors working in the energy-rich state, sensitive to stand-offs between foreign oil majors and the Kazakh government following a bigger dispute over the Kashagan field.

In January, the Kazakh state oil company doubled its stake in Kashagan and stripped Italy’s ENI <ENI.MI> of its leading role in the world’s biggest oil find in three decades after months of tense talks.

Karachaganak is also co-led by ENI as well as Britain’s BG <BG.L>, both with 32.5 percent stakes. U.S. company Chevron Corp. <CVX.N> has 20 percent and Russia’s LUKOIL <LKOH.MM> a 15 percent interest.

The Karachaganak stand-off started in December last year when the authorities froze KPO’s accounts in Kazakhstan after accusing it of not providing full information on gas flaring.

According to its production sharing agreement with Kazakhstan, KPO has the right to develop the deposit until 2038. (Reporting by Mariya Gordeyeva; editing by Santosh Menon)

Reuters
March 20, 2008
http://www.reuters.com/article/2008/03/20/kazakhstan-karachaganak-idUSL2010489220080320