Kazakhstan to change PSHA on Kashagan till the middle of October 2008

/REUTERS, Almaty, July 23, 08/ - Kazakhstan government plans to include changes to Production-Sharing Agreement (PSHA) on Kashagan digging till the middle of October 2008, the Minister of Energy and Mineral Recourses of Kazakhstan Sauat Mynbaev said to Time (www.time.kz). At the end of June, Kazakhstan government agreed to investors` offer on shifting the date of industrial production on deposit to 2013, while they planned it to start in 2005. "Those agreements that we hade reached and that are reflected in signed between parties memo on mutual understanding, should be included in PSHA till October 15 of the current year" - the newspaper supplies Mynbaev`s words. "In this relation I want to note that if consortium will conduct oil operations within the frames of agreed and confirmed parameters, Kazakhstan won't be the initiator of changes in PSHA, on the contrary, will be the support for consortium with the aim to get maximum profit from project" - he precised. Exxon Mobil, Royal Dutch Shell, Total, ConocoPhillips, Inpex Holdings Inc under supervision of Italian Eni is in consortium on Kashagan digging. KazMunaiGaz gained increasing of its share to 16.81% in January, what corresponds to the stake of major project's participant. Today, according to Mynbaev, there is a process of agreement execution, including purchase and sale, which should be finished by the middle of October of current year. "Mentioned decision (consortium share assignment in favor of KazMunaiGaz) is the basis of dispute settlement on development of Kashagan deposit, which will contribute to further acceleration of project development" - Mynbaev said. According to Minister of Energy, changes not only on term of digging but procedure of expenditures control and schedule, also by contractors will be included in PSHA. "Contract companies will conduct priority payments in RK favor in compliance with agreed interest scale. These payments will become the main part of compensation to republic for delay of commercial production in Kashagan and increasing expenditures on project" - Mynbaev said. According to Mynbaev, Kazakhstan's recession from consortium's expenditures in case if commercial oil production won't start before October 1, 2013 will be included in PSHA. "We also decreased the...percent, added to capital expenses by contractor. Besides, we managed to agree on new amount of punitive penalties for production delay after 2008" - Mynbaev said. Kazkahstan with adoption of new Tax Code in 2009 plans to increase taxes for primary spheres. In particular, it plans to exchange royalty for tax on minerals production (TMP) and abolish for new contracts such type as Production-Sharing Agreement (PSHA). Besides, since the end of May 2008 customs on oil export in amount of $109.91 per ton was introduced fro 38 companies that operate in Kazakhstan. Among them - semi state Exploration Production KazMunaiGaz and other small enterprisers. In July government added and expanded this list, imposing custom on LUKOIL, Eni, BG and Chevron. Answering the journalists` questions on changing operator of Kashagan consortium, Mynbaev said during the project it became evident that one company is not enough to manage with such project. "The model of single operator is supposed to be changed by model of joint operational company (JOC) with participation of all contract companies on North-Caspian PSHA and attracting their best specialists. And we think that KazMunaiGaz will be involved in all levels of new operational model" - Mynbaev said. Last year Kazakhstan produced 67.5 m. tones of oil and condensate, export made 60.8 m. tones. Forecast for 2008 is 67.6 m. tones. [2008-07-24]