The country's head demands from ENI fullfilmetn of engagements related to Kashagan development

/REUTERS, Almaty, October 29, 03/ - The president of Kazakhstan demanded a fulfillment of promises made by the operator of a giant oil project at Caspian shelf, Italian ENI, expressing for the first time his position on deferral of oil extraction launching at Kashagan, the largest among all fields discovered during the past 30 years in the world. During his trip across the country, Nursultan Nazarbayev said at press conference in Djezkazgan that Kazakhstan would defend its rights in the course of privately-held negotiations with ENI. "We will demand from investor strict fulfillment of engagements according to an agreement and the government will not step back from it", - Nazarbayev said, whose press conference was broadcasted by the state television late at night on Tuesday. "Consortium has obligations, which they promised to me they will be met and that consist of five clauses - they know them perfectly well", he added. ENI has got an operator status in 2001 by agreeing on 5 requirements imposed by Nazarbayev: to begin oil extraction at Kashagan in 2005, to to carry out transportation and selling not only of oil, but gas as well, to engage Kazakhstani subcontractors, to give state-run company Kazakhoil the status of co-operator and to preserve the Caspian ecology. However, in fall of this year ENI declared that first oil from the field will be supplied not earlier than 2006-2007. Kazakhstan said in response that the consortium has to pay compensation and starting from that time the parties hold private negotiations, which ENI expects to end by the end of the year. Nazarbayev said that Kazakhstan will defend its interests not within the limits of the agreement, but yet reminded about compensation by saying that it is a question of negotiations. "There is a sharing production agreement, which states everything clearly - all interests of our country are considered...The life makes its own corrections and when we are negotiating the interests of the state and investor must be clearly considered within the limits of an agreement. Whether it will be a compensation or something else - the Ministry of Energy, (state-run company) KazMunayGas with our investors will decide on this," - Nazarbayev said. According to the consortium's information, Kashagan deposits comprise nine billion barrels of oil, which allows extracting nearly 1.0 million barrels per day (50 mn per year) during relatively long period of time. Kazakhstan reaches estimate figures of 2.4-3.2 tones of oil (21.6-23.4 bn barrels). At the same time development of the field is complicated by geological complexity of deposits, as well as by freeing of Caspian sea in winter. Beside ENI consortium, which was created for Kashagan developing, includes French Total, American ExxonMobil and ConnocoPhilips, as well as Royal Dutch/Shell and Japanese Inpex. These companies have already invested $2.2 bn, and the source from the consortium says that the first stage of industrial development of oilfield may cost $9 billion, which will make Kashagan the largest project in the world. [2003-10-29]