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Friday, December 07, 2007

Exxon refuses to reduce its stake in Kazakh oil project

ASTANA, December 4 (RIA Novosti) - U.S. oil major Exxon Mobil refused to transfer to Kazakhstan part of its stake in a project to develop a massive oil field on the country's Caspian shelf, the Kazakh energy minister said on Tuesday. Exxon Mobil is a member of an international consortium set up to develop the Kashagan oil field. Kazakhstan's state-run oil and gas company KazMunaiGas announced on Sunday that all the parties except one had agreed to transfer parts of their stakes in the project to increase the Kazakh government's share, as a compromise over delays and a cost rise. When asked which company had denied Kazakhstan a share in the project, Sauat Mynbayev named Exxon. The Kashagan field is currently operated by Eni under a production sharing agreement. The Italian oil company, Royal Dutch Shell, Exxon Mobil and Total hold 18.5% each in the project, while ConocoPhillips has 9.3%, and Japan's Inpex and Kazakhstan's KazMunaiGas own 8.3% each. The Kazakh government suspended Eni's license to develop the Kashagan field for three months in late August. The Kazakh Ministry of Environmental Protection said operations by Eni could cause disastrous environmental damage and destroy local flora and fauna. In late July, the project operator suggested that the deadline to begin commercial production should be shifted from the second half of 2008 to the second half of 2010, with operating costs increasing from $57 billion to $136 billion. In line with Sunday's compromise, fixed in a memorandum of understanding, the parties are to complete talks by December 20 on the transfer of shares. According to the latest estimates, Kashagan's recoverable reserves amount to 7-9 billion barrels of oil.

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