Kazakhstan seeks $10 bln over oilfield delay
(Adds Eni Share price movements)
By Raushan Nurshayeva
ASTANA, Sept 4 (Reuters) - Kazakhstan wants more than $10 billion from an Eni-led (ENI.MI) consortium in compensation for delays in developing the Kashagan oilfield in the Caspian Sea, a senior government official told Reuters on Tuesday.
The Central Asian state suspended work at the Kashagan field on Aug. 27 in a row over delays in starting oil production and over cost overruns by the group, led by Italy's Eni, developing one of the world's biggest oil finds in three decades.
Asked how much compensation the government was seeking, Deputy Finance Minister Daulet Yergozhin said: "Certainly it will be more than $10 billion".
He warned that the number might increase.
"We are doing calculations now because it may have an impact on economic growth, on gross domestic product. So there might be a chain reaction," he said.
He was speaking a day before a deadline for talks between the two sides was set to expire. Yergozhin said a delegation of consortium officials was due to visit Kazakhstan for talks on Wednesday.
Eni in Milan declined to comment.
Kazakhstan has accused the consortium of breaking environment laws. This approach echoes Russia's dispute with Royal Dutch Shell (RDSa.L), involving allegations of environmental infringements, that ended with the company losing control of the Sakhalin-2 oil and gas project.
It also resembles moves in other resource-rich countries to tighten the state's grip over strategic assets.
Yergozhin denied the dispute was part of an attack against Western investors.
"There are many examples in Kazakhstan of investors abiding by the law and working normally," he said. "The answer is clear. Abide by the law and business ethics, and everything will be fine."
Shares in Eni dropped 0.6 percent to a day's low of 24.91 euros within minutes of Yergozhin's comments. The stock then pared most of its losses as Milan's S&P/MIB turned positive in the afternoon although it was still underperforming the S&P Oil & Gas index .SXEP, which was up 1.29 percent at 1457 GMT.
TAX QUESTIONS
Kashagan, with its estimated 38 billion barrels of oil in place, lies at the heart of Kazakhstan's plans to triple its crude output by 2015 as the former Soviet state fast emerges as a new source of non-OPEC oil.
Yergozhin said Kazakhstan's tax authorities had a number of unanswered questions about the consortium's tax payments and were conducting a planned audit.
"We will let you know about the results later. It will happen by October," Yergozhin said by telephone. "At the moment I can say we have questions which we have been unable to get answers for."
KazMunaiGas [KMG.UL], the only Kazakh firm involved in Kashagan, secured a $1 billion syndicated loan from Western banks to finance Kashagan's development, a banking source told Reuters Loan Pricing Corporation.
Kashagan's start of production has been delayed to the second half of 2010, slipping from an initial 2005 target. Its cost has escalated from $57 billion to $136 billion, according to the Kazakh energy ministry.
"The question is not about money," Yergozhin said. "We do not see how this project will be developing further. The question is about its shareholders. The operator's mistakes are the mistakes of all of the shareholders."
On Sunday Kazakhstan threatened to prolong its suspension beyond the three months already announced, putting further pressure on the consortium.
Yergozhin said Kazakh officials were not discussing changing the operator unilaterallly, because it was up to Kashagan shareholders to decide who runs the project.
The group also includes Royal Dutch Shell, Exxon Mobil Corp (XOM.N), Total (TOTF.PA), ConocoPhillips (COP.N), Japan's Inpex Holdings Inc (1605.T).
