Kashagan Compensation Agreed

The ENI lead consortium developing Kazakhstan's Kashagan offshore oilfield may have taken a first step towards resolving its dispute with Kazakh state oil company KazMunaigaz

At the weekend, the consortium agreed in principle to hand KazMunaigas a bigger stake in the project to compensate for production delays and cost overruns, Russia's Interfax news agency reported. The size of the additional stake is not yet determined. KazMunaigas currently holds 8.33 per cent of Kashagan.

The report added that Kazakhstan rejected ExxonMobil's demand that the Kashagan contract be extended beyond 2041 in exchange for allocating KMG more shares. Eni declined to comment on the report.

Kazakhstan earlier set an October 22 deadline for an amicable settlement of the Kashagan row which erupted after the Eni-led group postponed production at the field until 2010 and said that the cost of the first phase of the project had doubled to $20 bn. The Kazakh parliament recently passed legislation empowering the government to annul or revise oil contracts perceived to harm the republic's strategic interests.

Source: Financial Times

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2008
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