RusEnergy

21 September 2007 - Upstream OnLine - Chevron secured crucial backing from theKazakhstan's President Nursultan Nazarbayev for the Tengiz development today, but foreign investors remained wary as a row over the Kashagan project remained unsolved. Chevron boss Dave O'Reilly flew to Kazakhstan today for talks with Nazarbayev, a day after a Kazakh parliamentarian urged the government to halt Chevron's venture developing the Tengiz oil deposit due to ecological violations. O'Reilly quoted Nazarbayev as telling him that "Tengiz is an excellent example of how the government and a foreign investor can work together successfully", according to the Kazakhstan Today news agency. "Today during our meeting both the president of Kazakhstan and the prime minister expressed support for our company's activities," a Reuters report quoted him as saying. Kazakhstan's recent assertiveness in its dealings with foreign oil companies has alarmed investors, jittery in the wake of the government's row with an Eni-led consortium developing Kashagan. Kazakh officials suspended Kashagan operations last month, also accusing it of environmental breaches. Kazakhstan says Kashagan is an isolated case stemming from the project's continuous start-up delays and cost overruns, and denies it is part of a wider campaign against foreign investors. Tengiz came under fire earlier this year when officials threatened to halt its licence if it did not produce a plan to deal with sulphur stocks. The case was eventually dropped. However, concerns about investment climate rose again last week when Kazakh lawmakers started considering draft legislation that would allow the government to break the terms of contracts with oil investors. Kazakh Economy Minister Bakhyt Sultanov, speaking to reporters in Astana, defended the law. "I don't think it will negatively affect investment climate because everyone must understand that every state must have a legal basis to take into account its economic interests and national security," he said.