A Chevron-led oil venture in Kazakhstan will challenge a $609 million fine imposed on it for environmental law violations at the huge Tengiz oilfield, a spokeswoman said on Thursday. The fine was announced on Wednesday by Ecology Minister Nurlan Iskakov who cited the group's slow progress in removing open air sulfur stocks at the oilfield in the west of the vast and sparsely populated Central Asian state.

"We do not agree with the claim," Maria Karazhigitova, spokeswoman for Tengizchevroil which operates Tengiz, told reporters at an oil and gas conference in Almaty. "We disagree and will be challenging it," she said. "We are working in strict accordance with Kazakhstan's legislation."

She said a case related to the fine was filed in a regional court in July. Neither side had previously reported the fine.

The oil from Tengiz contains toxic hydrogen sulfide which is processed into huge piles of inert yellow sulfur and stored near the oil wells before the crude is transported by pipeline. Both the sulfur storage and accusations of excessive flaring of natural gas associated with the crude oil have in the past been the source of friction between Tengizchevroil and Kazakhstan's environmental agencies.

Tengizchevroil was previously fined $71 million for open air sulfur storage, but that sum was reduced on appeal in 2003 to $7 million by the Supreme Court. The Tengizchevroil venture also includes U.S. Exxon Mobil, Russia's LUKOIL, and Kazakh state oil and gas firm KazMunaiGas.

(Reuters, 04/10/2007)