Talks between Kazakhstan and Kashagan oil companies stall

Oct 22, 2007 02:00 AM

Talks between Kazakhstan and oil companies developing the giant Kashagan field have stalled as US ExxonMobil is blocking the expansion of the state's share in the project.
Sources were quoted as saying all other foreign members of the Kashagan group had agreed on a preliminary deal under which state energy firm KazMunaiGaz would raise its stake in the project from its current 8.33 %.

The proposed compromise, under which all group members would proportionally reduce their stakes, could settle a dispute over cost overruns and delays at Kashagan, one of the world's largest oil field developments. KazMunaiGaz's stake could double if Exxon were to give the final nod.
Exxon has 18.52 % of Kashagan, alongside project leader ENI as well as Shell and Total, which have stakes of similar size. Smaller stakes belong to ConocoPhillips, with 9.26 %, and Japan's Inpex, with 8.33 %.

Many partners, including Total, have called for a swift resolution, saying a deal should be reached by the end of the year. ENI has said the group is discussing the idea of increasing Kazakhstan's project role but has given few details.
Analysts have compared the development to similar moves by Russia, which last year ousted Shell from the leading role in the giant Sakhalin-II liquefied natural gas project. Shell and its partners sold control to state-controlled Gazprom.

Kazakhstan has threatened to strip ENI of its leading role in Kashagan, the biggest oil find in three decades, as it negotiates a new budget, which may exceed $ 100 bn (EUR 69 bn), and timetable for pumping crude.

Source: The Moscow Times
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