Kashagan issues should not be politicized, leaders say

Sept. 27, 2007
Kazakh President Nursultan Nazarbayev and Italian Prime Minister Romano Prodi recently said the situation regarding the Kashagan oil project should not be politicized.

Eric Watkins
Senior Correspondent

LOS ANGELES, Sept. 26 -- Kazakh President Nursultan Nazarbayev and Italian Prime Minister Romano Prodi, meeting on the sidelines of a recent United Nations meeting, said the situation regarding the Kashagan oil project should not be politicized.

The informal agreement came even as Kazakhstan's lower house of parliament unanimously passed legislation allowing the government to break oil contracts in the name of "national security."

"Prodi and Nazarbayev believe that politics should not be involved in this," said Yerlan Bayzhanov, Nazarbayev's press secretary. "This is a matter of business and cooperation between specific business circles."

Bayzhanov said, "Prodi expressed a wish that his forthcoming visit to Kazakhstan in October would not be linked with this issue," referring to the disagreement between his country's government and a consortium led by Italy's Eni SPA.

Over the weekend, Paolo Scaroni, Eni's chief executive officer, told Italy's Il Sole newspaper that there is "no need to be pessimistic" over negotiations with the Kazakh government concerning the Kashagan project.

Scaroni said Prodi's imminent visit to Kazakhstan a positive development, but conceded that it was very difficult to say when the dispute will be resolved.

Scaroni's comments came on the heels of a Sept. 20 meeting in Brussels between European Commissioner for Energy Andris Piebalgs and Kazakh Minister of Energy and Mineral Resources Sauat Mynbayev.

In a statement following the meeting, Piebalgs said, "Successful cooperation in the energy sector is based on mutual respect, transparency, predictability, and exclusion of discrimination."

Piebalgs said, "I approve of the minister's arguments concerning talks between Kazakhstan's authorities and the Kashagan consortium (the Agip KCO) and hope to receive further information on this issue."

Meanwhile, the legislation passed by the Kazakh lower house of parliament will increase the government's leverage in ongoing talks with Eni over the future of the stalled Kashagan oil project.

In a unanimous vote, lawmakers in the lower house passed amendments to the country's subsoil law that allow the government to force retrospective changes to any existing oil contracts or even break the contracts altogether if they are deemed "a threat" to the country's national security.

With the upper house of parliament also stacked with loyal members of the president's party, according to analyst Global Insight, the new legislation is likely to sail through that house shortly and quickly be signed into law by the Kazakh president ahead of his October meeting with Prodi.

Contact Eric Watkins at [email protected].