ExxonMobil put the brakes on a partner-backed plan to settle a long-disputed sulfur storage penalty at Kazakhstan's Kashagan field. The bill, set at 2.356 trillion tenge, or about $5.2 billion, has been on the table since 2022. After debating several ways to resolve it, ExxonMobil opposed the most recent option and convinced TotalEnergies, which had been on the fence, to take the same position. That pairing was enough to stop the deal, according to people familiar with the talks.
After years of legal back-and-forth, a court in the oil hub of Atyrau affirmed the penalty on June 19. The following month, Kazakhstan's Justice Ministry said it had initiated the process to recover the money. Around then, KazMunayGas decided to pay its portion of the fine, according to people cited by Bloomberg. At the same time, the companies are still fighting the charge in two international arbitration cases. The North Caspian Operating Co., which operates Kashagan, said on July 23 that it "consider the sulfur fine to be without any basis and are contesting it by all available means."
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ExxonMobil is promoting a fresh multibillion-dollar project aimed at developing an untouched part of Kashagan alongside KazMunayGas. In talks with Kazakh authorities, it said that any progress on the potential $80 billion plan would depend on settling disputes between the government and the Kashagan consortium, including the sulfur penalty.
The Kashagan venture includes Shell Plc, TotalEnergies SE, Eni SpA and state-run KazMunayGas National Co. JSC, with Inpex Corp. and China National Petroleum Corp. holding smaller stakes. Declining to comment were ExxonMobil, TotalEnergies, KazMunayGas, Shell and Inpex. Eni, CNPC and the North Caspian Operating Co. did not respond to requests for comment.
If the fine is settled, it could unlock one of the largest oil investments on the planet. If it drags, development timelines could, too. For anyone with exposure to these operators or Kazakhstan-linked energy plays, the path of this sulfur dispute may be the single biggest tell for when serious new spending - and future barrels - show up at Kashagan.
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