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09/12/07

Kazakh PM makes a statement on the Kashagan project


“We have revealed certain problems in the development of national energy sector. In particular, they have to do with some foreign investors who have failed to meet their earlier obligations; as a result, the national interests of Kazakhstan suffer substantial damage”, Prime-Minister Karim Massimov said at the Eurasian Energy Forum in Astana.

Category: Economy
Posted by: admin

“First of all I am referring to the situation around the Kashagan project. We are concerned about the actions of the members of the consortium in charge of developing the oilfield which have become regular in recent years. Hence, the Kazakhstan Government has to call in question their commitment to the contract terms”, Prime-Minister said.

According to him, the delayed start of the commercial production at Kashagan as well as more-than-twofold increase in the project costs are menacing Kazakhstan with serious social-economic repercussions; they may also tarnish the reputation of Kazakhstan as promising and reliable international partner which contributes to the global energy security. Thus, actions of the consortium members have resulted in protraction of the payback period and substantial reduction of Kazakhstan’s share in production sharing. This leads to failures in the planned construction of schools, hospitals and roads, as well as large-scale economic and infrastructure projects. “Kazakhstan does not agree with such a situation and won’t carry the economic burden caused by huge cost overruns brought about by inadequate management on behalf of the contractors. The Government of Kazakhstan is ready for open dialogue in order to resolve these issues within a reasonably short period of time”, Karim Massimov said.

Kazakh premier invited Eni’s head Mr. Scaroni to visit Kazakhstan to discuss the Kashagan project. “Furthermore, I have learned from the media sources that the EC Energy Commissioner Andris Piebalgs has voiced a certain stance with regard to the Kashagan issue. Therefore, I would like to invite the Commissioner to come to Kazakhstan if he has any questions and wishes to discuss the Kashagan issue”, Karim Massimov said.

He warned that “those who try to violate the Kazakhstan legislation and neglect national interests of Kazakhstan will be held responsible in accordance with the applicable legislation and international standards”.

“We regard the Kashagan dispute as an isolated case. Regardless of how it is resolved, legal interests of potential and acting investors in Kazakhstan won’t be affected. This is an official statement”, Karim Massimov said. He reminded that from the very day of its independence Kazakhstan has been offering the best possible terms for investors; and we will keep on ensuring stability, predictability and long-term nature of interests for our international partners. “Thus, Kazakhstan remains reliable and stable partner who respects its contractual obligations and protects contract stability. The Kazakhstan Government will change its attitude only towards those who fail to meet their obligations”, Prime-Minister emphasized.

“I want to remind you of the five points emphasized by the President of Kazakhstan for the consortium members back in 2001. Firstly, start production in 2005. Secondly, ensure environmental safety of the project. Thirdly, find a solution for the casing-head gas problem. Fourthly, purchase Kazakh equipment and services. And finally, grant a joint operator status to the national oil company. Take a look at these five points and compare them to what is happening now”, Prime Minister said.