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Kazakh state gas company KazMunaiGaz said on Monday it had reached
Kazakh state gas company KazMunaiGaz said on Monday it had reached a deal with firms developing a vast oil field on its Caspian shelf to raise its stake to the level of the main foreign participants.

The Kashagan field, the world's largest to be discovered in the last 30 years, is currently operated by Italy's Eni SpA under a production sharing agreement. The Italian oil company, Royal Dutch Shell, Exxon Mobil and Total hold 18.5% each in the project, while ConocoPhillips has 9.3%, and Japan's Inpex and Kazakhstan's government-controlled KazMunaiGas own 8.3% each.

"KazMunaiGaz announces that all participants in the Kashagan consortium have reached an agreement and signed a new memorandum of understanding. It seals the consent of all commercial participants in the consortium to transfer a stake to a KazMunaiGaz subsidiary to increase its share in the production sharing agreement to the level of the largest participants as of January 1, 2008," the company said in a press release.

The parties will now continue drafting a project and ensuring the adoption of relevant amendments to the PSA.

The agreement puts a stop to long and difficult negotiations launched last August.

Late in July Eni submitted its Kashagan-related proposals to the Kazakh government, under which the launch of production was to be postponed to the second half of 2010 from the second half of 2008 and costs increased from $57 billion to $136 billion.

In response, Kazakh authorities suspended Eni's license for Kashagan and demanded that participants in the consortium increase Kazakhstan's stake in the project. The parties had initially expected to complete talks on the transfer of their stakes to KazMunauGaz by December 20, 2007, but later extended the deadline to January 15, 2008.

According to the latest estimates, Kashagan's recoverable reserves amount to 7-9 billion barrels of oil.


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