Oil and Gas

Kazakhstan Seeks $10 Billion Over Oilfield Delay


Kazakhstan wants "more than $10 billion" from an Eni-led consortium in compensation for delays in developing the Kashagan oilfield in the Caspian Sea, a senior government official told Reuters on Tuesday.

The Central Asian state ordered work to stop at the Kashagan field on Aug 27 in a row over delays in producing first oil and cost overruns by the Eni-led group developing one of the world's biggest oil finds in three decades.

Players in Kazakhstan

Asked how much compensation the government was seeking, Deputy Finance Minister Daulet Yergozhin said: "certainly it will be more than $10 billion."

Speaking a day before a deadline for talks between the two sides was set to expire, he also said Kazakhstan's tax authorities had unanswered questions about the consortium's tax payments and were conducting a planned audit.

"We will let you know about the results later. It will happen by October," Yergozhin said by telephone. "At the moment I can say we have questions which we have been unable to get answers for."

Kazakhstan has threatened to prolong its Kashagan suspension beyond the three months already announced, putting further pressure on the consortium.

The group also includes Royal Dutch Shell, Exxon Mobil, Total, ConocoPhillips, Japan's Inpex Holdings and Kazakh state oil and gas company KazMunaiGas.

Sources close to the talks have said Kazakhstan was expecting the Eni-led group to come up with a proposal outlining "an adequate compensation" by Wednesday.

Yergozhin denied the case was part of a broader attack against Western investors. Some analysts have compared Kazakhstan to other resource-rich nations seeking to tighten the state's grip over strategic assets.

"There are many examples in Kazakhstan of investors abiding by the law and working normally," he said. "The answer is clear. Abide by the law and business ethics, and everything will be fine."