By Russell Hotten, Industry Editor
Last Updated: 12:29am GMT 15/01/2008
A group of Western energy majors has been forced to cede some control of the massive Kashagan oil field under a deal that resolves a long-running dispute with the Kazakhstan government.
Italy’s ENI, which leads a consortium that includes Royal Dutch Shell, ExxonMobil and Total, are selling part of their stakes in the project to the Kazakh state energy company KazMunaiGaz.
The company will pay $1.78bn (£900m) to double its stake in Kashagan to 16.8pc – level with other main consortium members – but the Eni-led group will pay the government $5bn in compensation for lost revenues because of delays to the project.
Kazakh president Nursultan Nazarbayev said last night: “The balance of justice has been restored.”
The Kashagan field is the largest oil reserve found in the world since the 1960s. Oil companies were clammering to help develop the field, but as crude prices rose Kazakhstan started reviewing the original revenue agreement and demanding a bigger share of the spoils.
The Kashagan dispute has echoes of Royal Dutch Shell’s problems at the Sakhalin-2 project off the east Russia coast. Shell and its partners eventually relinquished control after months of pressure from Moscow regulators.
Under the new Kashagan deal, the government will take up to 5pc of the profits before the consortium, which also includes ConocoPhillips, can recoup their costs. Tax breaks for foreign investors will also be reduced. Production at Kashagan is due to start in 2011.
The chief executives of the consortium’s main players, including Shell’s Jeroen van der Veer, are thought to have met Mr Nazarbayev in Astana yesterday to sign the new deal.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/15/cnoil115.xml
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