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According to an agreement between the Government of Kazakhstan and foreign contractors, production at Kashagan, the largest oilfield discovered anywhere in the world since 1960-s with estimated reserves of 35 billion barrels, will be further delayed to 2011.

Category: General
Posted by: admin

Previously, the starting date has been moved a number of times causing significant financial damage to Kazakhstan.

Mutually acceptable solution was announced on January 15, ending months of tense negotiations and satisfying all parties concerned. The solution involves Kazakhstan’s paying $1.78 billion to raise the stake of KazMunayGaz, national oil and gas company, in the Kashagan project up to 16.81 per cent, thus making the company an equal partner with foreign giants. Besides, under the new accord, Exxon Mobil, Royal Dutch Shell and France's Total will progressively join Eni of Italy, the current operator at Kashagan, in running the project.

The contractors will also pay $5 billion to the republic as royalties and compensation for the losses incurred as a result of delays.

At a meeting with representatives of Kashagan consortium member companies President Nursultan Nazarbayev hailed the new accord: “Kashagan is one of the largest oil fields and gas reservoirs in the world. Trying to develop it, Kazakhstan inked a production sharing agreement with largest transnational corporations. However, these companies failed to meet the outlined deadlines, and Kazakhstan has been loosing its share of profits".

“Therefore, last summer I instructed the Government to hold negotiations in order to protect Kazakhstan’s interests in this project. We have had very complicated talks that drew international attention. But we managed to protect our interests. The KazMunayGas Company doubles its share in the project, and our profits will increase in future”.

“Today’s meeting shows that we all are satisfied with the outcome. We have prevented possible breach of contract. Both foreign investors and Kazakhstan are pleased with the results of the talks,” he emphasized.

“I think we have to be shrewd and concrete and move on and I believe now we have devised a model which will allow us to go on in an uninterrupted fashion,” Stefano Cao, head of Eni's exploration and production unit said while discussing the issue with experts.