Sakhalin syndrome hits the Caspian

In Hungary

Eni, the Italian operator of the development project at the Kashagan oil deposit, has demanded that the budget for the project be raised from $57 billion to $136 billion.

Kazakh authorities are willing to do that only under the condition that the product sharing agreement be reexamined and their share in the profit from the oil be raised from 10% to 40%. Shell made similar demands of Russian authorities in negotiations over the Sakhalin2 project at one time, leading eventually to control over it being transferred to Gazprom.

Kazakh Prime Minister Karim Masimov stated yesterday that the government will reconsider its contract with Eni after the launch date for production at the huge Kashagan deposit was moved from the H2 of 2008 to the H2 of 2010. That change was announced at the beginning of the year, but this is the first time it has been officially acknowledged by the Kazakh government. Production was originally supposed to begin in 2005. The consortium has already paid $150 million in fines, but this time the Kazakh government will demand changes to the profit sharing agreement.

The Kashagan deposit has over 1 billion tons of recoverable reserves. The operator of the project is Agip KCO, in which Eni, Total, ExxonMobil and Shell each have 18.52% shares, ConocoPhillips has 9.26% and Kazmunaigaz and Inpex have 8.33% each.

Kazakh Minister of Natural Resources Bakhtykozha Izmukhambetov stated that the proposal to raise the expenditures for the project to $136 billion would be discussed at the monthly negotiations over the project on August 6. The operator explains the need for the money as the difficult geological conditions at the offshore deposit. (kommersant.com)

ADVERTISEMENT

Századvég raises GDP forecast to 7.8% Analysis

Századvég raises GDP forecast to 7.8%

Opposition parties to begin PM candidate primaries Elections

Opposition parties to begin PM candidate primaries

New editor-in-chief at Betone Studio Appointments

New editor-in-chief at Betone Studio

Budapest leaders make public transport free for under-14s City

Budapest leaders make public transport free for under-14s

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.