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Kazakhstan agrees to late Kashagan oilfield start

Sat Jun 28, 2008 2:58am EDT

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ASTANA, June 28 (Reuters) - Kazakhstan has agreed to put off the start of production at the huge Kashagan oilfield until 2013, Energy Minister Sauat Mynbayev said on Saturday.

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Kazakhstan and a consortium of Western oil companies developing Kashagan have been locked in a standoff over cost overruns and production delays at the multibillion-dollar project since August 2007.

In May, the consortium angered the Kazakh government by proposing to delay the start of production further to 2013.

But on Saturday, Mynbayev told reporters that Kazakhstan signed a deal with the consortium on Friday morning setting out details of Kashagan's future development and effectively fixing the start of commercial production at 2013.

"Yes, we have put it off," Mynbayev told reporters.

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, andJ delaying the start of production from the original 2005 target.

The Kashagan consortium unites Eni (ENI.MI), Royal Dutch Shell Plc (RDSa.L), Exxon Mobil Corp (XOM.N), Total (TOTF.PA), ConocoPhillips (COP.N), Kazakh KazMunaiGas [KMG.UL] and Japan's Inpex Holdings Inc (1605.T). (Writing by Maria Golovnina; Editing by Lincoln Feast)

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