Kazakhstan fines gas group on environment breaches

Jan 25. Reuters. ASTANA

* Consortium pays $27 mln in fines – Ecology Ministry
* Fines relate to two unscheduled inspections – ministry
* Project operators decline immediate comment

Kazakhstan fines gas group on environment breachesKazakhstan fined the consortium that runs the large Karachaganak natural gas project approximately $27 million for environmental violations last year, the Ecology Ministry said in a statement on Tuesday.

The ministry said the consortium, led by Italy’s ENI SpA (ENI.MI: Quote) and Britain’s BG Group (BG.L: Quote), was subject to two unscheduled inspections in 2010. Each ruled the operators had breached Kazakhstan’s environmental rules.

The ministry cited “a number of violations of ecology laws and damage for arbitrary and excessive storage of waste”, without providing further details. The amount of the fine, though relatively small, is the latest in a series of challenges faced by the operators of the Karachaganak project, which produces nearly half of Kazakhstan’s gas, 18 percent of its oil and has substantial expansion plans.

Kazakhstan’s customs committee said last week it recovered $143 million from the consortium in 2010.

The Karachaganak Petroleum Operating Group (KPO) could not be immediately reached for comment. The group has faced several tax and legal claims from Kazakh authorities, most recently a $1.2 billion claim in October.

State oil and gas company KazMunaiGas [KMG.UL] has stated its intention to acquire a stake in the consortium, in which ENI and BG each own 32.5 percent. U.S. major Chevron Corp (CVX.N: Quote) owns 20 percent and Russia’s LUKOIL (LKOH.MM: Quote) 15 percent.

ENI Chief Executive Paolo Scaroni said in August that the company was holding talks with Kazakhstan on cutting its stake in the project amid a dispute over costs.

Kazakhstan has previously accused KPO of violating immigration laws and overstating costs by $1.3 billion. The consortium has consistently denied any wrongdoing.

http://af.reuters.com/article/energyOilNews/idAFLDE70O0QP20110125?pageNumber=1&virtualBrandChannel=0

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