Kazakhstan, ENI close to agreement about postponement of extraction at Kashagan

/REUTERS, Astana, Raushan Nurshayeva, November 20, 03/ - Kazakhstan government and Italian company ENI heading consortium on the development of the giant oil field Kashagan at Caspian shelf, are close to agreement about the terms of extraction postponement within the framework of the project and discuss compensation in the amount of $150 m., said source in Kazakhstan government to Reuters. First the consortium and Kazakhstan authorities expected the first oil to appear at the field in late 2005, however afterwards ENI said it would occur not earlier than in 2006-2007. Kazakhstan in response said the consortium had to pay compensation, and the sides started holding closed negotiations, and Astana planned to finish them in September, and ENI - before the end of the year. "Unfortunately, they are going to be late for 2005. Now there is one year-delay, and in accordance with it they assumed obligation to pay certain compensation... This is the matter of $150 m... This is the result of compromises", - said the source on Thursday anonymously. According to his words, the agreement may be announced several weeks later. According to the consortium's data, reserves of Kashagan - largest among largest oil fields in the world revealed within last 30 years - are equal to nine billion barrels of oil that lets extract about 1.0 m. barrels a day (50 m. tons a year) during long time. Kazakhstan, according to estimations, is going to reach 2.4-3.2 bn. tons of oil (21.6-23.4 bn. barrels). However development of the field is complicated by geological difficulties of beds, and also by the fact that Caspian Sea freezes in winter. Besides ENI the consortium, which was founded for development of Kashagan, comprises French Total, American Exxon Mobil and ConocoPhillips, and also Royal Dutch/Shell and Japanese Inpex. These companies have already invested $2.2 bn. into the project, and sources in the consortium say the first phase of industrial development may cost $9 bn. that will make Kashagan the largest oil project in the world. [2003-11-20]