Blogger: Redirecting
Rated • 2 reviews • energy industry, industry, power, oil, geopolitic • blogspot.com
Eni SpA and partners in the Kashagan oil field agreed to cede a greater stake in the world's biggest crude discovery in 30 years to Kazakhstan, giving the government more profit and resolving a dispute over delays and costs.
State-run KazMunaiGaz National Co. will pay $1.78 billion to double its Kashagan stake to 16.8 percent, on par with the top shareholders, Energy Minister Sauat Mynbayev said today at a news conference in the capital Astana. The Eni-led group will pay the government $5 billion as compensation for lost revenue and start sharing profit with the state earlier than planned, he said.
Kazakhstan demanded renegotiation of the Kashagan agreement after delays, technical complications and cost overruns hampered the project. The government is following in the footsteps of Russia, which a little more than a year ago took control of Royal Dutch Shell Plc's Sakhalin-2 project in the Pacific Ocean after pressure by regulators.
``Although none of the foreign oil companies will be happy to give up equity, it's a small price to pay to resolve the impasse,'' said Chris Weafer, chief strategist at Moscow-based UralSib Financial Corp. ``It's better to have reduced equity in a project that has full state support rather than a bigger position in a project that faced an increasing number of problems.''
