An environmental dispute brewing between Kazakhstan and a foreign oil consortium tapping the Karachaganak field might herald further moves by the central Asian country to gain influence over the crown jewels of its oil industry. A Kazakhstan court fined the KPO group $15m on Tuesday for unauthorised gas emissions at Karachaganak, the country's third-biggest oilfield, in 2007. The consortium, jointly operated by BG and Eni , and including ChevronTexaco and Lukoil, denies wrongdoing and might challenge the ruling. Trina Fahey, from KPO , said: "We firmly believe we have not breached any of the republic of Kazakhstan's environmental legislation.' The court's decision marks an escalation of a row between Kazakhstan and KPO about gas flaring at Karachaganak, which began last year when the authorities froze the consortium's local bank accounts. There is concern that the accusations, echoing charges of environmental abuse levied last year against a foreign group developing Kazakhstan's giant Kashagan oilfield, might signal the start of a campaign by Kaz-Munaigas, the state oil company, to muscle into Karachaganak. Kashagan shareholders eventually agreed to pay Kazakhstan $4bn and hand more equity to KazMunaigas to compensate for ballooning costs and production delays at the flagship Caspian Sea oil project. KazMunaigas has no equity in Karachaganak, although it is a partner with Gazprom in a joint venture marketing all of the field's gas production. An opportunity for Kaz-Munaigas to negotiate entry to Karachaganak may occur this year when KPO asks the government to sanction an $8bn project to boost production at the field to 380,000 barrels a day, double the current levels. "At some point they will come to us with such a request,' said one western oilman who asked not to be named. Kazakhstan has pledged not to violate the sanctity of contracts and says it is innocent of so-called "resource nationalism' practised in other leading oil producing countries such as Russia and Venezuela. But legislation, including rules allowing the government to annul natural resource contracts deemed harmful to the national interest, ensures, as one western oilman put it, that "the balance of power is in the Kazakhs' favour'. Copyright The Financial Times Limited 2008