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ANSA: Eni’s Kazakh project threatened: Govt ‘drafting documents to dissolve consortium’

(ANSA) – Moscow, January 11 – Italian energy giant Eni’s huge Kazakh oil project faced a fresh threat Friday after a report that Kazakhstan authorities may try to ditch the consortium led by Eni’s oil subsidiary Agip.

According to a source cited by the Russian Interfax news agency, the Kazakh energy ministry ”is examining the possibility and drafting the necessary documents to dissolve the North Caspian project with the Agip Kso consortium”.

”I think the government will tackle the issue next week,” the source added.

The government has decided to act, he said, because of the lack of a united front in the Agip-led consortium after a deal to raise Kazkh oil company KazMunaiGaz’s quota to 16.8%. US giant ExxonMobil has not agreed to the deal’s revised prices, the source noted.

Storm clouds have been hovering over the project since the Kazakh government called a three-month halt last summer and asked to renegotiate terms, citing cost overruns and start-up delays at the Kashagan field – the world’s largest oil find in 30 years.

For some time Kazakhstan has been threatening to revoke the consortium’s license in a row which for many observers echoes Russia’s wrangle with Shell over an operation eventually taken over by Russian giant Gazprom.

The Financial Times recently said Kazakhstan ”might” go as far as ejecting the consortium but this was unlikely because it needed its expertise.

The Agip KCO consortium consists of Total, ExxonMobil, Royal Dutch Shell, ConocoPhillips, Impex and Kazkhstan’s oil company KazMunaiGaz. Italian Premier Romano Prodi visited the Kazakh capital Astana in October and sparked optimism about a solution to the dispute.

At the time, Eni CEO Paolo Scaroni said he saw an end to the row and voiced confidence that a Kazakh parliamentary bill on mineral rights, which might loosen the consortium’s hold on Kashagan, would not be approved.

But he admitted negotiations would still be ”complex”.

The Eni chief said he did not believe rumours that Gazprom might be behind Kazakhstan’s recent strictures on Kashagan.

Kazakh authorities suspended work at Kashagan for three months at the end of August, citing a fresh start-up delay – from 2008 to 2010 – and cost overruns that have pushed the consortium’s budget up three-fold.

As requested by the Kazakh authorities, the consortium issued a new budget at the end of the year.

Problems such as dealing with dangerous gases, drilling under the sea and bringing in expensive new machinery have dogged the Kashagan project, which was initially supposed to come on line in 2005.

The consortium plans to extract 7-9 billion barrels of oil from Kashagan’s estimated 38-billion-barrel field.

When it announced the three-month moratorium on August 27, Kazakhstan accused the consortium of environmental and customs irregularities. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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