Kazakhstan failed to finish negotiations with ENI about Kashagan postponement

/REUTERS, Astana, Raushan Nurshayeva, November 24, 03/ - Kazakhstan and consortium headed by Italian ENI still have not come to agreement about terms of postponement of extraction within the project, said minister of power engineering and mineral resources of Kazakhstan Vladimir Shkolnik, who expected ending of negotiations last week already. On Friday Shkolnik said negotiations in London were close to the end and called the sum of possible compensation - $150 m., and also terms for which beginning of extraction could be postponed within the framework of the largest oil project in Kazakhstan and at Caspian Sea as the whole: one year-one year and a half. On Monday at the press-conference Shkolnik said the sides had not come to agreement, sum of compensation could be higher and postponement - one year and a half-two years. "Just now (leaders of Kazmunaigas) have come from London, where they held the most difficult negotiations. We will go on it here, in Astana ", - he said having added that compensation could be "much greater" than $150 m. First the consortium and Kazakhstan authorities expected the first oil at the field in late 2005, however afterwards ENI stated it would occur not earlier than in 2006-2007. Kazakhstan in response said that consortium would have 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. "2005 was called. Now it's is postponed by one year and a half or by two years. It's postponed mainly by objective reasons ", - said Shkolnik on Monday. One of participants of London negotiations, president of state-owned company Kazmunaigas Uzakbai Karabalin during the same press-conference refused to tell details and call the sum of the possible compensation. "As regards period of negotiations, we can not say exactly, because this is two- sided process. As regards out intentions, we would like to finish it as soon as possible", - said Karabalin. Besides ENI the consortium, which has been founded for development of field, which is one of the largest ones in the world among revealed within the last 30 years, comprises French Total, American Exxon Mobil and ConocoPhillips, and also Royal Dutch/Shell and Japanese Inpex. According to consortium's data, Kashagan's reserves are equal to nine billion barrels of oil that lets extract about 1.0 m. barrels a day (50 m. tons a year) for long time. Kazakhstan is reaching 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 the beds, and also by the fact that Caspian Sea freezes in winter. Consortium has already invested $2.2 bn. into the project, and sources in consortium say the first phase of industrial development of the field may cost $9 bn. that will make Kashagan the largest oil project in the world. [2003-11-24]