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Reuters: Shell, Kazakhstan oil block deal still not sealed

EXTRACT: Shell’s industry-lagging record at finding oil and gas has been a concern for investors.

Thu Jan 18, 2007 3:03am ET

ASTANA, Jan 18 (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile , Research) and Kazakhstan have not yet clinched a deal, expected by the end of 2006, to explore the Nursultan block in the Caspian Sea, the Central Asian country’s oil minister said on Thursday.

Shell has been in competition with U.S. major ConocoPhillips (COP.N: Quote, Profile , Research) to win exploration rights for the block, close to Kuryk, where Kazakhstan plans to build a port. Energy and Natural Resources Minister Baktykozha Izmukhambetov said in November the government favoured Shell and expected a deal by year-end. Asked about the negotiations on Thursday, the minister said: “There’s no decision yet. The question remains open”. He told reporters in the Kazakh capitak Astana: “These negotiations have been going on for a long time. We have many such cases”.

Izmukhambetov said that another exploration licence involving Shell, Kazakh national oil company KazMunaiGas and the national Oman Oil Company to explore the Zhemchuzhina block in the Kazakh sector of the Caspian Sea took 10 years to negotiate. Shell has previously confirmed it is in talks over the Nursultan block and Dutch Foreign Minister Bernard Bot lobbied for the deal when he met Kazakh President Nursultan Nazarbayev in Astana last May. Nazarbayev’s backing is crucial for any major project in the former Soviet state.

Shell’s industry-lagging record at finding oil and gas has been a concern for investors.The company is al ready a consortium member in the Eni-led (ENI.MI: Quote, Profile , Research) giant Kashagan field in the Caspian, which is due to come on stream in 2009 and help propel Kazakhstan into the world’s top 10 oil producers in the next decade.

An estimate printed three years ago in a state-owned Kazakh newspaper put Nursultan’s hydrocarbon reserves at 349 million tonnes (2.652 billion barrels), citing figures from KazMunaiGas.

© Reuters 2007. All Rights Reserved.

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