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Financial Times: Kashagan delays ‘threaten Kazakh growth’

By Isabel Gorst in Moscow
Published: September 12 2007 03:00 | Last updated: September 12 2007 03:00

Kazakhstan yesterday told Italy’s Eni that delays and cost inflation at the huge Kashagan oil development would stymie the Central Asian republic’s economic growth.

It also appealed to investors not to politicise the dispute.

Paolo Scaroni, chief executive of Eni, the operator of the consortium developing Kashagan, met Karim Massimov, the Kazakh primeminister, and Sauat Mynbaev, the energy minister,in Astana to discussthe -government’s dem-and for improved contract terms.

The Kazakh government is seeking compensation for a two-year delay to production and a doubling of costs of the first phase of the Kashagan project.

Kazakhstan is dissatisfied with Eni’s management of Kashagan, which lies at the heart of the republic’s plans to triple oil production within the decade.

Mr Mynbaev issued a statement saying problems at the field would “substantially reduce the planned rate of economic growth in the coming decade, threatening fulfilment of the long-term programme for the econ-omic development of the country”.

Eni said the talks were held in a “climate of co-operation”.

Mr Scaroni also met officials from KazMunaigas, the Kazakh state oil company, which the government said last week should co-operate on Kashagan.

Eni’s partners at Kashagan include ExxonMobil, Shell, Total, ConocoPhillips and Inpex of Japan.

Mr Mynbaev said Kazakh-stan was “ready for open dialogue” with the Eni group.

He added: “I ask you not to politicise our basic demand that resource users fulfil their obligations.”

Copyright The Financial Times Limited 2007

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