Kazakhstan urges Chevron to store sulphur indoors

ASTANA, July 9 (Reuters) - Kazakhstan urged a Chevron-led (CVX.N) oil venture on Wednesday to work out a way to lock up its vast open-air sulphur stocks in an indoor facility by 2010.

The authorities have long accused the Tengiz oilfield project of making slow progress in removing open air sulphur stocks. A court slapped a 74 billion tenge ($609 million) fine on Tengizchevroil last year but the fine was later halved.

Raushan Sarmurzina, a senior Energy Ministry official, told reporters the ministry had put forward its demands "in a strict manner".

"By 2010 all the sulphur must be stored in a storage facility if it's not sold by then," she said. "It's our goal and we've put forward this question in a strict manner."

The oil from Tengiz contains toxic hydrogen sulphide which is processed into huge piles of inert yellow sulphur and stored near the oil wells before the crude is transported by pipeline.

The Tengiz venture also includes Exxon Mobil (XOM.N), LUKOIL (LKOH.MM), and Kazakh energy firm KazMunaiGas [KMG.UL]. The venture has challenged Kazakh accusations, saying it was not violating ecological legislation.

"First of all we think that at the moment we are storing the sulphur in a proper way," Murat Mynbayev, a Tengizchevroil official, told reporters. "As for 2010, we have no information about that."

He added his company was working on various ways of storing sulphur indoors and planned to cut stocks significantly by 2017. (Reporting by Raushan Nurshayeva; Writing by Maria Golovnina)