Kazakhstan wants hefty compensation for cost overruns and delays at the giant Kashagan oil field and favors replacing Italy’s Eni with a local company as operator, its deputy finance minister was quoted as saying.
Kazakhstan, currently in talks with Eni on the future of the contract, expects compensation for “tens of billions of dollars” of economic harm, Daulet Ergozhin told the Wall Street Journal in a telephone interview, its online edition said on Friday.
He said Astana, which halted operations at the Caspian Sea project on Monday citing ecology issues, would “look positively” on a proposal to put a local company in control or operate the project jointly.
Kashagan is the biggest oil find in decades, but its start-up has been plagued with delays and cost overruns that have long irked Kazakhstan, which analysts say is keen to get higher revenues out of the project.
“The question of changing the operator remains on the agenda,” Ergozhin said, adding the government was “not fully satisfied” with the current operator and wanted changes to the structure of the deal.
But the government was not insisting Kazakh oil company KazMunaiGas, a member of Eni-led group of investors, should become the operator, he said.
Eni declined to comment on the report. It has postponed a visit by analysts to the field planned for this month.
The group also includes Royal Dutch Shell, Exxon Mobil, Total, ConocoPhillips and Japan’s Inpex Holdings.