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Reports: Kazakhstan suspends operations at massive Kashagan oil development

Reports: Kazakhstan suspends operations at massive Kashagan oil development

Kazakh officials have ordered operations at the country's largest oil development suspended and the Finance Ministry announced a criminal investigation, news reports said, signaling growing unhappiness with delays at the project led by Italian oil giant Eni SpA.
The move against the developer of the Kashagan field comes after months of warnings by Kazakh officials against the Eni-led consortium, which also includes Total SA, Exxon Mobil Corp., Royal Dutch Shell PLC and other companies.
The government has been unhappy with the consortium since it announced earlier this year that the start of production at the northern Caspian Sea field had been pushed back from 2008 until 2010. The consortium also said project's costs would more than double to US$136 billion (euro100 billion).
The delays are troubling to Kazakhstan because it pushes back the date when the government can expect revenues from the project.
Environmental Protection Minister Nurlan Iskakov told reporters in the capital Astana Monday that inspectors had found violations at the development.
"The permit for 2007 has been suspended, that is we have halted operations on our part for three months," Iskakov was quoted late Monday as saying by Kazakh and Russian news media, including Kazakhstan Today and Interfax.
The Finance Ministry, meanwhile, said Monday it had launched a criminal investigation against a subsidiary of the Eni-led unit that operates Kashagan for allegedly violating customs legislation. Also, news reports said the Emergency Situations Ministry had called for a suspension of operations at a refinery being built to service the Kashagan development, citing violations of fire safety regulations.
Kashagan, one of biggest oil discoveries of the past 30 years, is expected to play a crucial role in filling a pipeline completed in 2005 and designed to carry Kazakh oil to energy-hungry China.
The circumstances surrounding Kashagan and its operators bears echoes of similar projects in Russia, where the government has pressured major foreign energy companies into giving up control or significant stages in major energy developments.
Recoverable oil reserves at Kashagan are estimated at a minimum of 7 billion barrels and the total oil in place at 38 billion barrels.


Updated : 2021-05-09 22:58 GMT+08:00