ASTANA, January 14 (RIA Novosti) - It will cost $1.78 billion to more than double Kazakhstan's share in the international project to develop the Kashagan oil field, the country's energy minister said on Monday.
The Kazakh state gas company KazMunaiGaz said earlier in the day that a deal had been reached with firms developing the vast oil field on its Caspian shelf, the location of one of the largest recent discoveries of oil in the world, to raise its stake to the level of that of the main foreign participants.
"An agreement has been reached that the shares of the largest shareholders will be proportionally reduced in order for the Kazakh stake to eventually reach 16.81%," Sauat Mynbayev told a news conference.
The Kashagan field is currently operated by Italy's Eni SpA under a production sharing agreement. The Italian oil company, Royal Dutch Shell, Exxon Mobil and Total hold 18.5% each in the project, while ConocoPhillips has 9.3%, and Japan's Inpex and Kazakhstan's government-controlled KazMunaiGas own 8.3% each.
"The price of the additional stake will be $1.78 billion plus interest charged until sum is paid, which is to be done after production starts," Mynbayev said.
The minister added that Kazakhstan would receive $5 billion from the consortium in royalties, plus compensation for the delayed launch of the project.
He also said the project would have a new operator. "It will be a new company set up by all parties to the project. However, the old operator - Eni - will be in charge of completing the pilot development," the minister said.
He said commercial production has been scheduled for late 2011.
The agreement brings an end to protracted and complicated negotiations launched last August.
Late in July, Eni submitted its Kashagan-related proposals to the Kazakh government, under which the launch of production was to be postponed until the second half of 2010 from the second half of 2008 and costs increased from $57 billion to $136 billion.
In response, Kazakh authorities suspended Eni's license for Kashagan and demanded that participants in the consortium increase Kazakhstan's stake in the project. The parties had initially expected to complete talks on the transfer of their stakes to KazMunauGaz by December 20, 2007, but later extended the deadline to January 15, 2008.
According to the latest estimates, Kashagan's recoverable reserves amount to 7-9 billion barrels of oil.
