Kazakhstan eyes bigger state role in key oilfield
( Reuters ) - Kazakhstan warned an Eni-led consortium of Western oil majors on Thursday the Kazakh state oil company could take a greater role in the Kashagan oilfield following a row over the project's delays and cost overruns.
Kazakhstan has piled pressure on the group headed by Italy's Eni ENI.MI, suspending Kashagan's operations altogether last month and dealing a blow to investor confidence in the oil-rich Central Asian state.
Speaking on Thursday, Prime Minister Karim Masimov said state energy company KazMunaiGas should gain a bigger say in developing one of the world's biggest oil finds in three decades.
"According to the Kazakh president's orders and demands, KazMunaiGas should be a co-operator," he told reporters on the sidelines of a conference in Astana. "I will not say anything about percentages at this stage."
KazMunaiGas currently has 8.3 percent in the project in a shallow part of the Caspian Sea.
Pressed on specifics, Masimov would not say what the government's exact plan was. Asked what the government would do if the consortium did not meet Kazakh demands, he said: "Then we have Plan B. I'll tell you about that later."
Analysts have drawn parallels between the Kashagan dispute and cases of resource nationalism where governments around the world, emboldened by high oil prices, seek more cash and control from foreign companies tapping their riches.
But Masimov said Kazakhstan's concern was that Kashagan delays could undermine the country's economic growth.
"The delay in commercial oil production at Kashagan and the doubling of costs threaten Kazakhstan with serious social and economic consequences," he said.
Moves against the group, citing mainly ecological issues, echoed Russia's row with a Royal Dutch Shell-led RDSa.L group, which was solved only after the partners ceded control in Sakhalin- 2, a huge oil and gas project, to a state firm.
Masimov said a call for a bigger Kazakh role in the project was part of President Nursultan Nazarbayev's five point plan, first announced in 2001, for Kashagan's development.
The plan included a demand for the consortium to start production in 2005, guarantee ecological safety, make proper use of the gas extracted together with the oil, make use of Kazakh materials and services, as well as take KazMunaiGas as a co-operator.
Production has been postponed to the second half of 2010.
Deputy Finance Minister Daulet Yergozhin told Reuters on Tuesday that the government was seeking more than $10 billion in compensation for the problems at Kashagan.
He was quoted by an Italian newspaper on Thursday as saying costs and lost revenues from the delays could be more than $40 billion.
Other participants in the consortium are Royal Dutch Shell RDSa.L, Exxon Mobil Corp XOM.N, Total TOTF.PA, ConocoPhillips COP.N and Japan's Inpex Holdings Inc 1605.T.
But Masimov, speaking earlier, denied Kazakhstan sought to squeeze foreign investors out of its oil sector and invited the chief executive of Eni and other senior officials for talks.
" Kazakhstan is immune from so called resource nationalism," he said. " Kazakhstan has been and remains a responsible participant in the system of guaranteeing international energy security."