UPDATE 3-Kashagan firms may delay, face Kazakh sanctions
(Adds analyst comment, background, quotes)
By Raushan Nurshayeva
ASTANA, May 12 (Reuters) - Kazakhstan threatened on Monday to slap sanctions on a Western consortium developing the giant Kashagan oilfield in the Caspian Sea should its operators decide to delay the start of production again.
The production schedule at the world's biggest oil discovery in 30 years is a thorny issue between the consortium and the Kazakh government following a bitter six-month stand-off which ended in a tentative agreement in January 2008.
Kazakh Energy Minister Sauat Mynbayev told reporters in the Kazakh capital Astana the consortium, which groups Italy's (ENI.MI), Exxon Mobil (XOM.N) and other majors, has already voiced the possibility of delaying the schedule.
"Yes they want to put it off. They have various scenarios, involving the year 2012-13. But we will react to the consequences in quite a harsh say," Mynbayev told reporters.
"Even if there is a small delay..., then very concrete sanctions must be drawn up at this stage. We are trying to settle all these matters again."
The stand-off over Kashagan started in August 2007 when the government accused its shareholders of allowing costs to spiral to $136 billion from $57 billion, and delaying the start of production from the original 2005 target.
Under the latest agreement, it is due to start pumping oil at the end of 2011.
Analysts said Mynbayev's remarks amounted to a warning shot by the Kazakh government as the talks on the start of production and, possibly, a revised budget entered their final stage ahead of the late-May deadline.
"The breaking story over a delayed start-up and the Kazakh government's resistance to further delays could signal the start of rhetoric that will develop over coming weeks," Citigroup analyst Mark Bloomfield wrote in a note.
"In the meantime, there has been a delay to the announcement by Eni and its partners of the revised budget for both the initial 'experimental phase' and the full field development, which Eni had said would be made by end-March."
TALKS CONTINUE
While calming investor confidence shaken after months of squabbling, the January deal can technically be enforced only after the sides agree on the precise production and structural details of the project.
A source close to the talks told Reuters top Kashagan partners met Kazakh officials in the capital Astana on May 8 to finalise a number of key details of the January deal, including the start of production.
"We have questions regarding the schedule and we have put them forward. We do not intend to let this issue go just like that again," Mynbayev said.
"It's not a question of having to sign something definitely by May 31. The question is to sign something perhaps a bit later but something that would first of all suit us."
Under the January deal, Kazakh state oil company KazMunaiGas will double its stake in Kashagan and strip Eni of its leading role in the project.
The energy ministry said at the time KazMunaiGas would pay $1.78 billion to raise its stake to 16.81 percent from the previous 8.33 percent. The shareholders would cut their stakes on a pro-rata basis.
Other shareholders are Royal Dutch Shell Plc (RDSa.L), Exxon Mobil Corp (XOM.N), Total (TOTF.PA), ConocoPhillips (COP.N) and Japan's Inpex Holdings Inc (1605.T) .
For a factbox on Kashagan double click on [ID:nL12477825]
(Writing by Maria Golovnina)
