Senate of Kazakhstan approves "right of 1st night" for shares in oil projects

05.11.04 11:08
/REUTERS, Astana, Raushan Nurshayeva, November 5, 04/ - Senate of Kazakhstan on Friday confirmed corrections in legislation, which give to executive authority the priority right to buy shares in oil projects. The law "About inclusion of changes and additions in some legislative acts of Kazakhstan concerning usage of bowels and making oil operations" will take effect if the country's president signs it. "This is... a historic correction", - senator Jandarbek Kakishev explained idea of the document at the press-conference. "In 1995-1996, when economic situation was difficult, we gave some fields to foreign companies. Today economics has improved, we can buy them back. If a foreign company sells its stake, shareholding, Kazakhstan has the priority right to it at market prices", - he said. In the middle of 2004 Kazakhstan government suddenly declared about its priority right to buy 16.67% stake of BG, which was leaving the project of oil extraction at Kashagan. Since that time the Cabinet, which estimates this stake at about $1 bn., negotiates with other participants of international consortium, which doubt in Astana's right for the priority purchase. The consortium comprises ENI, Royal Dutch/Shell, ExxonMobil, ConocoPhillips, Total and Inpex, besides BG. Deputies' initiative about "the right of the first night" seems to be a reaction for dispute concerned with the stake in Kashagan, due to which Kazakhstan plans to increase extraction level 3 times and be one of top ten oil extracting states. The government disclaims a connection of proposed change sin the law with the "BG case". Western investors are anxious about toughening of the tax climate in Kazakhstan. The USA called Astana to provide firmness of agreements with investors. [2004-11-05]