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ExxonMobil wants to become Kashagan field operator

24 November 2007 - Issue : 757


Kazakhstan's giant Kashagan offshore oil field in the Caspian Sea

US energy giant ExxonMobil is seeking to become the operator of the project to develop Kazakhstan's Kashagan offshore Caspian oil field, whose oil reserves are put at a minimum of seven billion barrels and its total oil reserves at 38 billion barrels.

US Energy Secretary Samuel Bodman, during talks with Kazakh Energy and Mineral Resources Minister Sauat Mynbayev on the fringes of the congress, which was held in Rome, promised technological and financial aid to Kazakhstan if ExxonMobil was appointed operator of the project, which is being run by international consortium Agip KCO, a source who took part in last week's World Energy Congress, told Interfax.

Making ExxonMobil the operator would give US companies - if one counts Kazakh-American venture Tengizchevroil - control of more than 70 percent of oil production in Kazakhstan.

Earlier, Kazakhstan threatened to strip ENI of its status as operator as the company had announced it had moved the deadline for the start of production at Kashagan to the second half of 2010 from 2008 and that it had enlarged the project budget to USD 136 billion from USD 57 billion.

A month ago, Agip KCO decided to give Kazakh state oil and gas company KazMunaiGas a larger share in the project by curtailing the stakes of other consortium members. ExxonMobil was the only Agip KCO member to set conditions for the enlargement. It demanded extending the production sharing agreement (PSA) underlying the project beyond 2041. Kazakhstan rejected the demand.

The source said that, when the PSA was being signed in 1997, then US secretary of state Colin Powell was lobbying for ExxonMobil to be appointed project operator but that the consortium made a different choice.

Meanwhile, French oil major Total SA's (TOT) Chief Executive Christophe de Margerie was quoted as saying by press in Brussels he doubts there will be progress made in the Kashagan oil field development talks with the Kazhastan government by the November 30 deadline.

KazMunayGas and Inpex hold an 8.33 percent share each in Kashagan. ENI, Total, ExxonMobil and Shell have 18.52 percent stakes each. ConocoPhillips holds a 9.26 percent share.

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