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Kashagan operator fined $737 million for flaring

21 march 2014, 23:33
Island D at Kashagan field. ©Reuters
Island D at Kashagan field. ©Reuters
Kazakhstan ecologists are demanding that the Kashagan field operator pays a fine of $737 million to compensate the environmental damage it caused, Tengrinews reports citing the Ministry of Environment and Water Resources of Kazakhstan.

"The Ecology Department for Atyrau Oblast has sent a damage compensation order to Agip KCO and North Caspian Operating Company B.V. (NCOC). The environment harm was caused by emission of polluting substances into the air during flaring of sour gas at the refinery. The damage estimated at $737 million was calculated based on the Rules of Economic Evaluation of Damages from Pollution of the Environment," the Ministry said.

According to the Ministry, there was a leak of hydrogen sulphide gas from a pipe rapture not far from the oil and gas refining facility on September 24, 2013. Because of the accident the residual gas from offshore and onshore facilities of the Kashagan oil field was redirected and flared of onshore and offshore complexes of Kashagan oil field.

"On September 25, 2013 - February 3, 2014 the Ecology Department for Atyrau Oblast held an unscheduled inspection of the operations of the consortium developing the Kashagan field (Agip KCO and NCOC) in relation to the incident. The checks revealed that in September and October 2013 all the residual gas was being flared at the refinery and at the island. According to the inspection report, the excessive flaring of sour gas totalled at 2.8 million cubic meters," the Ministry said.

An administrative case were initiated based on the results of the inspection.

The Kasahgan project has been haunted with technical problems causing delays and suspension since the very beginning of the initial production in September 2013. Commercial production at Kashagan started on September 11, 2013. It was suspended 2 weeks later because of a gas leak, then restarted and suspended again days later when another leak was detected in October. Parts of the damaged pipe were sent to a British lab to study the cause of the problem. The production was expected to be restarted in 2013, but it is still suspended.

In the beginning of March 2013 Sauat Mynbayev, KazMunaiGas national oil company Chairman, said that he expected the production at the giant Kashagan oilfield to be resumed only in the second half of the year.

There is no longer any clarity about the amounts of oil to be produced from the field either. Chairman Mynbayev said that production estimates would be available only after the final statement of the field's technical failures was made in the end of March.

Before the technical troubles started manifesting themselves Prime-Minister of Kazakhstan Serik Akhmetov said that the Kashagan field was expected to produce nearly 3 million tons of oil in 2014.

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