Kazakhstan, consortium agrees to new Kashagan terms

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Oct. 31 -- The government of Kazakhstan has reached a long-awaited agreement with Agip Kazakhstan North Caspian Operating Co.—the Eni-led consortium developing Kashagan oilfield—over control of the project.

"I would not say it's a victory (for Kazakhstan), but it shows respect for the Republic of Kazakhstan and its resources," said Maksat Idenov, Kazakhstan's main Kashagan negotiator.

"The new accord improves the economic conditions for the Republic of Kazakhstan and increases the share of KazMunaiGas' (KMG's) daughter companies to the level of the big participants," the Kazakh energy ministry said.

In terms of percentages, the increase will double KMG's stake to 16.81%, the same as Eni, ExxonMobil, Total, and Royal Dutch Shell, while ConocoPhillips will have 8.40% and Inpex 7.56%.

To accommodate KMG's increase, Eni, Total SA, ExxonMobil, and Shell each saw their respective shares fall to 16.81% from 18.52%, while the stakes of ConocoPhillips and Inpex fell from 9.26% and 8.33% respectively.

Kazakh Energy Minister Sauat Mynbayev said in January that KMG would pay $1.78 billion to compensate its partners for the reduction in their respective shares.

"The accord also puts into place a mechanism for strong control over delays and spending to prevent a repetition of the problems that led to last year's negotiations," the ministry statement said.

The ministry was referring to August 2007 when the Kazakh government accused the consortium partners of allowing costs to soar to $136 billion from $57 billion and of delaying production start-up to the end of 2010 from the originally planned 2005.

From the standpoint of the Kazakh government, the spiraling costs and delayed start-up would have meant further delays in the arrival of revenues much needed for social programs.

To avoid a repetition of that situation, Eni will lose its status as sole operator of the field, and from January 2009 a joint operating company—the North Caspian Operating Co. (NCOC) —will be created, owned on a pro-rata basis by all the consortium members. Consortium partners will assume charge of the company's management in rotation.

The consortium, in a separate statement, described the deal as a "new way forward for the development of the Kashagan project."

Kazakh officials gave no details of the final agreed budget at the time of the agreement's signing on Oct. 31. The government earlier said the final budget was fixed at $136 billion, up from the previous estimate of $57 billion. The consortium has invested $12.3 billion so far.

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

ConocoPhillips revises down $2 billion from budget

01/29/2015 ConocoPhillips has shed an additional $2 billion from its capital expenditures for 2015, decreasing total spending to $11.5 billion from the previo...

Chevron, BP, ConocoPhillips join to explore, appraise Gulf of Mexico leases

01/28/2015 Chevron Corp. subsidiary Chevron USA Inc., BP PLC unit BP Exploration & Production Inc., and ConocoPhillips Co. have pledged to work together t...

Conoco's Lance calls for repeal of US crude oil export ban

01/26/2015 The US crude export ban that was imposed in 1975 should be repealed 40 years later to ensure the US oil and gas renaissance continues, ConocoPhilli...

For the US economy, a falling oil price has drawbacks, too

01/05/2015

Cheer in the US about an economic lift from falling oil prices needs qualification.

ConocoPhillips slashes 2015 capital budget

12/22/2014 ConocoPhillips has elected to reduce its 2015 capital budget to $13.5 billion, down 20% compared with this year's budget. The news comes on the hee...

ConocoPhillips slashes 2015 capital budget

12/08/2014 ConocoPhillips has elected to reduce its 2015 capital budget to $13.5 billion, down 20% compared with this year’s budget. The news comes on the hee...

BLM issues final SEIS for Greater Mooses Tooth project in NPR-A

10/30/2014 The US Bureau of Land Management released its final supplemental environmental impact statement for the proposed Greater Mooses Tooth (GMT1) oil an...

Western gulf lease sale attracts $110 million in high bids

08/20/2014 Gulf of Mexico western planning area Lease Sale 238 drew 93 bids from 14 companies over 81 blocks covering 433,823 acres, totaling $109,951,644 in ...

ConocoPhillips, Enap sign deal to study unconventional oil, gas in Chile

08/06/2014 ConocoPhillips and Chile’s state oil company Empresa Nacional del Petroleo (Enap) have signed a technical agreement to jointly conduct geological, ...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected