Tenge Depreciation Cuts Kashagan Environmental Fine — Expert

The weakening of the tenge has reduced the environmental fine imposed on the Kashagan oil field operator — the NCOC consortium — by almost one billion U.S. dollars, oil and gas industry analyst Olzhas Baidildinov has noted, Orda.kz reports.

In his Telegram channel, Baidildinov recalled that in March 2023, NCOC was fined 2.3 trillion tenge for environmental violations.

At the time, the exchange rate was 451.71 tenge to the dollar, making the fine worth over $5.9 billion.

Now the court has ruled in favor of the consortium due to procedural errors in the fine’s issuance. There will be a retrial (I don’t know when). However, at a dollar rate of, say, 560 tenge, this amount has already decreased for the consortium by $985 million, to $4.1 billion! Even if the consortium is fined and NCOC pays the full amount immediately — they’ve saved a billion bucks in two years! Baidildinov wrote.

The analyst questioned why foreign oil companies are not fined for environmental violations in hard currency.

He urged members of the Majilis to address the issue and propose amendments to Kazakh legislation.

Kashagan’s consortium does not supply oil to the domestic Kazakh market, does not help keep fuel prices low (unlike other Kazakh companies), and earns foreign currency revenue as all oil production is exported in dollars. Why are they fined in tenge?!Baidildinov said.

Original Author: Nikita Drobny