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Wednesday, October 03, 2007

Kazakhstan fines Chevron-led group $609 million

kazakhstanOctober 3, 2007 - Reuters by Maria Golovnina and Raushan Nurshayeva - ALMATY, Kazakhstan: Kazakhstan slapped a fine of $609 million on an oil venture run by Chevron on Wednesday but softened its rhetoric in a parallel battle with another group of major Western oil companies. Ecology Minister Nurlan Iskakov said the government imposed the fine on the Chevron-led oil venture developing the Tengiz oilfield for various violations, including what the government saw as Chevron's slow progress in dealing with vast sulfur stocks. Iskakov said that the matter was being handled by a Kazakh court. "Any company that does not fulfill ecological requirements will be dealt with in the harshest way," Iskakov said. Foreign investors in the Central Asian state are already increasingly wary in the wake of Kazakhstan's dispute with a consortium led by Eni over cost overruns and production delays at the huge Kashagan oil field. As in Tengiz, the Kashagan operators have been accused of violating ecological rules, also over sulfur stocks. Kazakhstan has threatened to strip Eni, an Italian energy company, of its leading role at Kashagan, the biggest oil find in three decades. But in a separate speech to oil investors in Almaty, Energy Minister Sauat Mynbayev struck a less aggressive tone over Kashagan, saying both sides should work out a compromise. "Let's accept a compromise decision: after the date of commercial production is set, we will demand a plan on sulfur stocks by that date," he said, adding that he would sign a special memorandum with the consortium on that. "If we sign this memorandum, nothing should prevent work at the project from continuing in its present form," he said. But the government also seeks financial compensation of more than $10 billion for the delays in production at Kashagan - a topic Mynbayev did not touch on. Chevron could not be reached for comment, but the U.S. energy giant had previously rejected criticism of its environmental record in the former Soviet state and said that it operated its sulfur stocks in a safe manner consistent with Kazakhstan's laws.

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