Prime Minister: Kazakhstan can Deprive Eni of Status of Kashgan Field’s Operator
Azerbaijan, Baku / Trend / Kazakhstan Government can deprive Eni company of the status of the operator of Kashgan oil field, Kazakhstan's Prime Minister, Karim Masimov, said in an interview with The Wall Street Journal, Interfax quotes. "We are very disappointed with the implementation of the project. If this operator fails to resolve the problems we will probably select another one," Masimov said.
According to analysts, Kazakhstan's authorities are unlikely to take that step as the project is very complicated. However, they will probably require more share in the profits. The spokesman for Eni stated that the consortium was maintaining contacts with Kazakhstan authorities and the company is sure in successful solution of the problem. Initially Eni stated oil production will begin in 2005, later production was postponed to 2008, and in February to the end of 2010.
The company stated that it has underestimated the scale of the project. According to the estimations of the company, pick of oil production will make up 1.5mln barrels per 24hours and will be achieved in 2019, while previous forecasts indicated 1.2mln barrels per 24 hours in 2016. The company also made reference to fall in exchange of dollar and increase in expenses for purchases. Eni submitted its reviewed estimations to Kazakhstan Government in June. Last week Masimov accused the consortium of violation of the terms of the agreement signed in 1997 and threatened to take the appropriate measures.
Kazakhstan is dissatisfied with the terms of the agreement of 1997, which will enable the investors to cover their expenditures at the expense of profits from Kashagan before they will begin to pay off the Government's share, as it was with Shell in Sakhalin. In case of increase in expenses, KazMunayGaz which has 8.3% share in the project will have to put the corresponding part of additional investments.
"That means that less schools and hospitals will be constructed. There is a discontent on the occasion in the public," Masimov said.