Last Update: 1:59 PM ET Dec 1, 2006
LONDON (MarketWatch) — Italian oil giant Eni SpA’s (E) chief executive Friday said any extra payments as a result of delays in its Kazakh Kashagan oil project won’t be large, and won’t lead to woes similar to those experienced by Royal Dutch Shell PLC (RDSB.LN) in its Sakhalin oil and gas development.
Under the contract of Eni’s Kashagan project, the “delay will imply extra payment” to Kazakhstan, Paolo Scaroni said at a press and analyst briefing.
“It is set by the contract but it isn’t a large number so we are relaxed,” he added later.
He was confirming statements by Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov earlier this week that the country intends to seek compensation for the latest delay at the Kashagan oil development.
Production at the Kashagan oil field in the Caspian sea is unlikely to start before 2009-2010 because of technological difficulties related to the development, consortium partners have said. Oil output had originally been targeted for 2005.
Izmukhambetov also said Kazakh national oil company KazMunaiGas would hire independent experts to provide an assessment of the production delay at Kashagan.
“(Kazakhstan) will make some kind of audit. It will happen and that’s fine,” Scaroni said.
Scaroni said that, as a shareholder, KazMunaiGas has been making decisions along with other partners, which makes Eni confident there won’t be “bad surprises.”
He said that this “was not the case in Sakhalin” where a Shell-led project, which has been under pressure from Russian authorities, has yet to get national gas company OAO Gazprom (GSPBEX.RS) as a shareholder.
The Financial Times reported Monday that Kashagan will produce significantly more than the 13 billion barrels of oil forecast. Output will be 25% above forecasts once it hits peak production, the FT reported, without citing sources.
But Scaroni said an update on the project would “likely be in January,” not by the end of the year as previously announced, but before Eni’s annual results are announced in February.
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ENI manage this project very bad.They are pathetics…The ”pure” italian management way.A lot of loosers,drunkers and non-profesionalism…They will not pay to much for delayed,because they gave bribe to kazakh goverment..Exxon,Total,Shell try many times to change the operator ,but it was impossible(even they have 56%!!!!!)….