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Kashagan Oil Field, Kazakhstan


Description:

The giant Kazakhstani oilfield, Kashagan, is one of the world’s biggest oil finds and the ‘biggest oil discovery’ of recent times [1]. With the start of the project being delayed for 13 years (now the start date has been moved to 2016) due to several environment, legal, and investment-associated complications, it is also ‘the world’s most expensive standalone project’ [2]. Despite such a grand amount of complications, the NCOC (North Caspian Operating Company, a consortium of international companies including Eni, Exxon Mobil, Royal Dutch Shell, Total, CNPC (China) and Inpex(Japan) [1] is not giving up attempts to extract the vast deposits of the oilfield. The case history of Kashagan involves numerous conflicts, public hearings, as well as court cases. One of the major conflicts has been the impact of the oil field on the health of the local populations as well as on the fragile environment of the area.

Part of the oil field is located within a protected North Caspian Sea nature reserve (it was declared as such during the Soviet era and all hydrocarbon extractions were banned) with its unique biodiversity, including endangered Beluga sturgeon and the Caspian seal [4]. According to the geologist Muftah Diarov, a few years back numerous birds were burnt as a result of Kashagan’s new processing plant operations and the public was not informed of that until several weeks later [5]. Additionally, in September 2013, a major hydrogen sulphide (dangerous toxic gas found in large amount in the Kashagan oil) [6] leak occurred at the refinery as a result of a burst pipe, and the operating company flared 2.8 million cubic meters of sour gas, r[6]. Ever since, the Kazakhstani ecological authorities have fined NCOC a sum of 737$ US million for large-scale damages to the environment, but the final decision has not been made to date [6] [September 2014].

Also, as a part of Production Sharing Agreement’s (PSA) required consultation with the public and all interested parties in March 2013 [3] [5] numerous concerns regarding the safety and accident prevention on the field were raised. Namely, what happens if mercaptans are discharged, where the polygons for storing liquid and hard waste are, if the rescue plane arrives in 72 hours after an accident what is going to happen to the spill in the meanwhile, why the NCOC ships will be present in the protected nature reserve area, will citizens experience further shortages of potable water, what compensation will be offered to the citizens, and many other vital questions [6]. Specifically, local ecologists addressed the recurring issue of public access to information, as most of the environmental reports are not available to public and since 2006 residents have had limited to zero participation in the consultation [3]. Several NGOs have published information on the inadequate to unlivable conditions, poor and deteriorating health, low level of income and inaccessibility to/ absence of infrastructure for population of nearby towns and settlements [3] [7]. Numerous issues associated with the oilfield are still present. Nevertheless, the project is moving ahead. As Kazakhstan President N. Nazarbaev noted, ‘I am confident that despite escalating complications, we will be able to solve problems we face with the project’ [8].

Basic Data

Name of conflict:Kashagan Oil Field, Kazakhstan
Country:Kazakhstan
State or province:Atirauskaya Oblast
Location of conflict:Atirau
Accuracy of locationHIGH (Local level)

Source of Conflict

Type of conflict. 1st level:Fossil Fuels and Climate Justice/Energy
Type of conflict. 2nd level:Oil and gas exploration and extraction
Wetlands and coastal zone management
Specific commodities:Crude oil
Natural Gas

Project Details and Actors

Project details

-Total deposits are estimated to be 35 billion barrels of oil, with 11 billion labeled as 'recoverable'.

-Originally the plan for extraction was 1.5 million of barrels/ day (b/d). As the result of numerous complications, the current plan is to extract 350,000 b/d starting in 2016.

-The oil contained in a reservoir with extremely high pressure and lethal concentration of H2S (hydrogen sulfide).

- As of 12 Aug 2014, the companies listed below had stakes in the NCOC (the consortium) and Agip KCO (daughter company of Italian Eni S.p. A.) was the operator of the project.

Project area:337500
Level of Investment:137,000,000,000.00
Type of populationUnknown
Affected Population:150,000-200,000
Start of the conflict:21/08/2007
Company names or state enterprises:ExxonMobil Corporation (Exxon) from United States of America
Eni group from Italy
Royal Dutch Shell (Shell) from Netherlands
KazMunaiGaz (KMG) from Kazakhstan
INPEX Corporation from Japan
Total SA from France
China National Petroleum Corporation (CNPC ) from China
Relevant government actors:The Government of Kazakhstan:
-Kazakhstan Environment Protection Ministry
- Atirau Regional Administration as represented by Bakhtikozha Izmukhambetov
-Ministry of Gas and Oil of Kazakhstan
International and Finance InstitutionsEuropean Bank for Reconstruction and Development (EBRD)
Environmental justice organizations (and other supporters) and their websites, if available:International NGOs:
Crude Accountability
Friends of the Earth
Local NGOs:
Globus
Jayik Caspian Aarhus Centre
Local ecologists and geologists

Conflict & Mobilization

IntensityLOW (some local organising)
Reaction stageIn REACTION to the implementation (during construction or operation)
Groups mobilizing:Indigenous groups or traditional communities
International ejos
Local ejos
Neighbours/citizens/communities
Women
Local scientists/professionals
Fisher people
Forms of mobilization:Creation of alternative reports/knowledge
Development of a network/collective action
Development of alternative proposals
Involvement of national and international NGOs
Lawsuits, court cases, judicial activism

Impacts

Environmental ImpactsVisible: Air pollution, Biodiversity loss (wildlife, agro-diversity), Surface water pollution / Decreasing water (physico-chemical, biological) quality
Potential: Genetic contamination, Loss of landscape/aesthetic degradation, Soil contamination, Waste overflow, Oil spills, Large-scale disturbance of hydro and geological systems
Health ImpactsPotential: Accidents, Exposure to unknown or uncertain complex risks (radiation, etc…), Mental problems including stress, depression and suicide, Occupational disease and accidents
Socio-economical ImpactsPotential: Loss of livelihood, Violations of human rights

Outcome

Project StatusUnder construction
Conflict outcome / response:Court decision (victory for environmental justice)
Technical solutions to improve resource supply/quality/distribution
Under negotiation
Development of alternatives:Crude Accountability: an urge to financial institutions and banks to stop further financing of the project
As published on the Ifri Report:
-a call for independently-assessed expert report about the damage done to the area
-to absolutely halt flaring gas at Kashagan
-to come up with an ecologically friendly solution to the problem of storage, disposal, and management of sulfur at the site
-before the project goes on, great attention and an independently conducted expert study shall assess the risks and consequences to the health of the local population
-the resulting socio-economic situation shall be independently assessed and local people shall be compensated for the damage done to their environment and livelihood.
Do you consider this an environmental justice success? Was environmental justice served?:No
Briefly explain:The extraction of oil was indeed stopped, but it is due to technical complications and an accident with pipes, not environmental concerns. And after the problem is fixed, the project will be continued.
The consortium has largely ignored the requests made my NGOs and local activists to provide more information about the damage caused, the potential damage and potential solutions and compensations.
They have created jobs and built some infrastructure, but as locals report those are low level entry jobs and infrastructure cannot be adequately used (such as a school whereas there is no transportation to the school).

Sources & Materials

Links to general newspaper articles, blogs or other websites

[1] Link to the article that describes shift of the start date to 2016 and has basic info about companies involved:
http://www.reuters.com/article/2014/07/30/us-oil-kashagan-idUSKBN0FZ2GN20140730

[2] Article explaining financial complications of Kashagan:
http://business.financialpost.com/2014/01/02/crippled-kashagan-oil-project-a-bureaucratic-nightmare/?__lsa=79f1-1d10

[3] NGO Crude Accountability summary of environmental and health concerns:
http://crudeaccountability.org/campaigns/kashagan/#environment

[6] An article about environmental damage of 2013 and the legal implications of it:
http://en.tengrinews.kz/environment/NCOC-and-Agip-to-dispute-Kashagan-fine-26818/

[8] Kazakhstan President’s words are quoted from here:
http://www.kursiv.kz/news/details/kompanii/nazarbaev_obespokoen_khodom_realizatsii_proekta_kashagan/

Companies that have stakes in the Kashagan project:
http://www.kmg.kz/manufacturing/upstream/kashagan/

More information about institutions financing the loans to corporations involved at Kashagan:
http://www.banktrack.org/show/dodgydeals/kashagan_oil_project#tab_dodgydeals_finance

Some more info about Kashagan project:
http://www.ft.com/intl/cms/s/0/970cb422-d219-11e3-8b5b-00144feabdc0.html#axzz3ELEXq7JT

Some more info about Kashagan project:
http://caspianbarrel.org/?p=10703

Companies that have stakes in the Kashagan project:
http://www.kmg.kz/manufacturing/upstream/kashagan/

[5] An article about an open meeting with local population and their voiced environmental and health concerns:
http://rus.azattyq.org/content/kazakhstan-kashagan-caspian-ncoc/24936119.html

[7] A report published by CEE Bankwatch about Kashagan that contains more detailed info about environmental impact, economic and political conditions and NGO work:
http://bankwatch.org/documents/Kashagan_oil_field_ru_web_Final.pdf

Related media links to videos, campaigns, social network

Kashagan. One of the artificial islands built to extract the oil
http://www.eni.com/en_IT/attachments/innovazione-tecnologia/project/kashagan/kashagan-isola-a-en.jpg

Other documents

[4] Ifri (French Insitute for International Relations) assessment report on Kashagan:
https://file.ejatlas.org/docs/Kashaganbis.pdf

Meta information

Contributor:Yevgeniya Yatsenko, MICLA McGill University, [email protected]
Last update01/10/2014