Bloomberg: Kazakhstan Cuts Oil Forecast Amid Delays at Eni Field (Update1)

By Nariman Gizitdinov and Christian Schmollinger

Oct. 12 (Bloomberg) — Kazakhstan cut its crude oil output forecast as a minister warned that Eni SpA may further delay the development of the country’s Kashagan field, the biggest oil discovery in more than three decades.

Kazakhstan lowered its planned production level for 2015 by 7.1 percent to 2.6 million barrels a day, President Nursultan Nazarbayev said at a conference in the capital, Astana, today. Separately, Energy Minister Sauat Mynbayev said Eni may be forced to delay the Caspian Sea Kashagan field for a third time from its current 2010 target date.

The former Soviet republic, which holds about 3 percent of the world’s oil, has criticized Eni over delays and cost overruns at the Kashagan field. Kazakhstan, which said the project’s total budget has soared to $136 billion, wants a new development plan from Eni by the end of the year. The Italian company has twice delayed the project from its original 2005 target.

“I am not sure that the starting date will be in 2010 as we need an agreement first,” Mynbayev said in an interview today. “If we don’t reach an agreement, the start of production will definitely be later. If we reach an agreement, I still don’t have full confidence that production will start in 2010.”

A spokeswoman for Eni in Rome declined to comment.

Kazakhstan’s Energy Ministry in June cut the 2015 oil output target to 2.8 million barrels a day from 3.2 million barrels a day. The government earlier this month said it must receive and approve a new development plan from the Eni-led group this year.

Former Soviet States

“The problem with the former Soviet states is that they signed contracts years ago when the price of oil was much lower,” said Andy Sommer, a Hamburg-based analyst at HSH Nordbank AG. “They are using violations of contracts to get bigger stakes.”

Mynbayev previously said the government is waiting for proposals from Eni, and that a larger stake for Kazakhstan could be part of a solution.

Eni, Exxon Mobil Corp., Total SA and Shell all hold 18.5 percent of Kashagan, while ConocoPhillips has 9.3 percent. Kazakhstan’s national oil company, KazMunaiGaz National Co., and Japan’s Inpex Corp. each own 8.3 percent.

The six international oil companies each named a representative for talks with the Kazakh government, Eni’s exploration and development head Stefano Cao said Oct. 8. KazMunaiGaz is not involved in negotiations with the international companies as it’s represented with the government, Cao said.

With reporting by Greg Walters in Moscow and Adam Freeman and Anthony DiPaola in Rome. –Editor: Schweizer (wke).

To contact the reporter on this story: Greg Walters in Moscow [email protected]

Last Updated: October 12, 2007 06:03 EDT

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