Eric Watkins
Senior Correspondent
LOS ANGELES, Oct. 4 -- Kazakhstan authorities have imposed a $609 million fine on Tengizchevroil (TCO), the Chevron Corp.-led consortium developing giant Tengiz oil field, for alleged violations of national environmental legislation.
Kazakh Environmental Protection Minister Nurlan Iskakov said the company "is causing colossal damage to the environment and all people in Kazakhstan's western region by its actions." He said complaints had been filed against the consortium for storing uncondensed sulfur during 2003-06.
A TCO spokesperson said the consortium had received notification of the fine but said the firm would appeal. TCO said formal notification of the fine was delivered by a local court in July. The firm said it operated and managed its sulfur storage in an environmentally safe manner.
TCO also said it was reducing the sulfur stockpiles by increasing sales, which have increased by 28% as of June 30. Sulfur has been sold to China, Russia, Uzbekistan, and Kazakhstan, and some Mediterranean countries.
After the July notification, however, TCO came under further pressure in September when Kazakh parliamentarians threatened to revoke the company's license if it did not produce a plan to deal with the storage of millions of tonnes of sulfur at the site.
Gani Kasymov, a member of the upper house of parliament, called for TCO's project to be suspended unless the joint venture dealt with the "huge stocks" of sulfur that have built up at the field as a byproduct of the production of sour Tengiz oil and gas. "The nation is closely watching the government's actions to protect our country's economic interests," Kasymov told parliament.
Chevron thought its problems with the Kazakh government had been resolved later in September when Chief Executive Officer Dave O'Reilly met with Kazakh Prime Minister Karim Masimov and other officials, who praised TCO as a model of cooperation.
"The regional authorities have always found the common ground with Tengizchevroil on every issue that arises," said Bergei Ryskaliyev, the governor of Atyrau, the region of Kazakhstan where TCO operates.
"Taking advantage of this opportunity, I once again want to express my appreciation for the work done by Tengizchevroil in the region," Ryskaliyev said at a meeting with O'Reilly.
In August, TCO said it produced 6.72 million tonnes of oil in the first half of 2007, an increase of some 12% over the 6 million tonnes it reported for the same period in 2006.
TCO is comprised of ChevronTexaco Overseas 50%, ExxonMobil Kazakhstan Ventures Inc. 25%, KazMunayGas 20%, and LukArco 5%.
Contact Eric Watkins at [email protected].