ASTANA, July 30 (Reuters) - Kazakhstan is in talks
to renegotiate better terms with international majors developing its huge Kashagan oil
field and is prepared to punish them for start-up delays, Kazakh officials said on Monday.
"I want to warn the companies via the media that we consider changes in start-up
terms as changes of the contract itself. Therefore we will respond adequately,"
Kazakhstan's Prime Minister Karim Masimov told a government meeting.
Kazakhstan's energy minister, Baktykozha Izmukhambetov, told the same meeting the
government was in talks with the Kashagan group, led by Italy's ENI <ENI.MI, to revise
the share of "profit oil for Kazakhstan" to 40 percent from 10 percent.
He did not elaborate about changes to the terms but said the government was not happy that
Kashagan's start-up had been delayed to the second half of 2010 from late 2008, a further
slippage from the original 2005 target.
In April, Masimov announced an audit of all energy and mineral resources contracts but
said the country had no intention of seeking unilaterally to revise any existing deals.
The vast Central Asian state has attracted tens of billions of dollars of foreign
investment into its rapidly growing oil, gas and metals extraction industries.
In recent years it has demanded terms more in its favour to reflect lower risks of
investment.
Analysts said Kazakhstan's actions were not different from those of other oil rich
nations, where resources nationalism traditionally spikes together with the rise of oil
prices.
Kazakhstan produces about 1.3 million barrels of oil a day from two major onshore fields -
Tengiz and Karachaganak - and hopes to increase production to over 3 million bpd when
Kashagan starts up.
Kashagan became the world's biggest oil find in 30 years when it was discovered last
decade but its development is delayed by technical challenges, which also prompted ENI to
almost double Kashagan's first-phase costs to $19 billion.
Forecast output for the first two tranches was trimmed to 350,000 bpd from 450,000 bpd.
Eni's main partners in Kashagan are Exxon Mobil Corp. <XON.N, France's Total
<TOTF.PA and Royal Dutch Shell Plc <RDSa.L. Industry executives have said the
partners have been concerned about Eni's handling of Kashagan.
Eni blamed two-thirds of the cost hike on the broadening scope of the project, and the
rest on foreign exchange and cost inflation.
Reuters
31 Jul 2007
