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Kashagan Delays May Lead to New Fines

The Wall Street Journal: Eni Delays May Lead to New Fines

May 13, 2008; Page B4

Kazakhstan’s government said it may slap new fines on the Eni SpA-led consortium developing the Central Asian country’s massive Kashagan oil field after the group informed the government of a fourth delay to starting production.

“We have been notified by Eni about the delays, and we’re evaluating possible sanctions, but no final decision has been taken by the government,” a senior Oil Ministry official said.

The consortium, which includes Exxon Mobil Corp. and Royal Dutch Shell PLC, has proposed postponing the start of production to 2012-13 from 2011, Kazakh Energy Minister Sauat Mynbayev said Monday, according to the Interfax news agency. “We’re trying to come to an agreement again,” he said.

The project was originally expected to start in 2005. The consortium continues to suffer setbacks because of the project’s complexity.

An Eni spokesman declined to comment. Some analysts said the latest apparent setback wasn’t a surprise. “A lot of people in the financial community didn’t believe in the 2011 start date,” said David Stedman, an analyst with Daiwa.

http://online.wsj.com/article/SB121064676913487451.html

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