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Specialists Work on Kazakh Oil Row Solution: Prodi

Reuters
Sunday, 7 Oct 2007 | 3:36 PM ET

Italian Prime Minister Romano Prodi, arriving in Kazakhstan on Sunday, said specialists were working on potential solutions to a dispute between Kazakh authorities and Italian oil company Eni.

But Prodi said the row over development of the Kashagan oil field was not on the agenda of his three-day trip to the Central Asian country, even though it would come up during slated talks Monday with Kazakh President Nursultan Nazarbayev.

Kazakhstan, citing cost overruns and delays, is seeking billions of dollars in compensation and threatening to strip Eni of its leading role in a consortium of Western oil majors at Kashagan, the world's biggest oil find in three decades.

Talks face a Oct. 22 deadline.

"The Kashagan issue was not, and is not, on the political agenda of this trip. It will be discussed with the president, but there are technicians that are working and they will give one or more hypotheses for solutions," Prodi said.

Kazakhstan has raised its bargaining power in the dispute with a new law that lets the government break or alter contracts with foreign investors. The law has alarmed foreign companies, who saw the government suspend Kashagan operations in August.

Eni, 30% state owned, heads a Kashagan consortium comprising Royal Dutch Shell, France's Total, ConocoPhillips, Japan's Inpex Holdings and Kazakh energy company KazMunaiGas.

Harsh weather, poisonous hydrogen sulphide gas, the Caspian Sea site and very high pressure have made Kashagan a technical challenge. Solving those problems has contributed to delays.

Prodi's visit comes just days after Kazakhstan fined a Chevron-led oil venture $608 million for violating environmental laws, alarming investors. Chevron denied wrongdoing on Thursday and vowed to contest the fine.

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