Kazakhstan wins stake in BG’s Kashagan oil field

Nov 07, 2004 01:00 AM

Kazakhstan has reached a preliminary agreement in its controversial bid for part of a stake owned by British Gas (BG) in the vast Kashagan offshore oil field, the country's foreign ministry said.
Talks held in London on the state's bid for part of BG's 16.67 % stake produced "agreement in principle on participation by the Kazakh side", the foreign ministry said.

The Kashagan project in the Caspian Sea is the largest and most complex of several under way in this oil-rich former Soviet republic, seen by the West as a potential alternative to traditional producers in the Middle East.
The state's recent announcement that it wanted at least part of BG's stake in Kashagan is seen as inconvenient to the other shareholders, who had hoped to distribute the stake among themselves after the British firm announced it wanted to sell last year, informed sources have said.

Kashagan is thought to be the world's fourth or fifth largest oil field, with estimated reserves of 45 bn barrels, of which between 8 bn barrels and 13 bn barrels are currently considered recoverable. The project has been beset by difficulties, including a delay in the start of production from 2005 until 2008, partly attributed to the unwieldiness of its seven-member ownership structure.
While Italy's ENI operates the field, its stake, unusually, is equal to those of BG, TotalFinaElf, ExxonMobil and Shell -- at 16.67 % -- while smaller stakes are held by ConocoPhillips and Inpex.

Executives have voiced concern that Kazakhstan may be unwilling to match its recent insistence on ownership of offshore fields with corresponding levels of investment.
Kazakhstan's upper house of parliament approved legislation giving the state the first pick of any stake in mineral extraction projects that come up for sale -- confirming Kazakhstan's right to part of Kashagan, an official at the ministry of energy and mineral resources told. The consortium is set to invest about $ 20 bn in Kashagan over its first 20 years.

In another development, plans to bring oil from the Black Sea coast of Russia to a Greek port on the Aegean Sea by way of a pipeline through Bulgaria have been revived after a gap of almost 10 years, the Greek Development Ministry said.
Oil would be taken by tankers from Novorossiisk on the Caspian Sea to the Bulgarian Black Sea port of Burgas from where it would be sent another 320 km overland by pipeline to Alexandroupolis in the far northeast of Greece.

The announcement followed a tripartite meeting in Athens, at the end of which a joint statement spoke of the "common interest" of the three countries in implementing the plan. The three countries signed a memorandum of co-operation which is to be submitted in the weeks to come to the three ministers concerned, the Greek side said.
The project will cost EUR 702 mm ($ 908 mm) and the three partners "intend to back the establishment of an international company" and "will work together to involve international oil companies active in the Caspian Sea and centralAsia".

Source: Gulf Daily News
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