Kazakhs Threaten to Expel Italians as Operator
Guy Chazan of The Wall Street Journal has a
scoop today that Kazakhstan is exasperated with progress in developing its Kashagan oilfield, the largest discovery on the planet in more than three decades. The upshot - Italy's ENI may lose the prestigious operatorship of the field.
The first part of Chazan's story:
ASTANA, Kazakhstan -- Ratcheting up the rhetoric over a cost-overrun dispute at one of the world's largest oil fields, the prime minister of Kazakhstan said his government might remove Italy's Eni SpA as operator of the project. "We are very disappointed with the execution of this project," Karim Masimov said in an interview in the Kazakh capital, Astana. "If the operator can't resolve these problems, then we don't exclude their possible replacement." Mr. Masimov's comments signify intensifying brinkmanship ahead of a face-off this week between the government and the Eni-led consortium developing the strategically important Kashagan field. Oil-industry observers and regional insiders have said Kazakh authorities aren't likely to take the extreme step of firing Eni as operator because of the project's complexities. But they will probably demand a bigger and possibly earlier take from revenue.
Steve's comment: It is probably true that Masimov's remarks amount to brinksmanship. But Kazakhstan is not the only party exasperated with ENI's performance -- its partners in the supergiant field are also fed up with what now looks like a seven-year delay in first oil, until 2012.
To get the partnership, ENI had to fend off rivals Exxon Mobil and Total. So, quite apart from the Kazakhs' sentiments, there is reason to expect some change in the operatorship, starting with greater formal involvement of ENI's partners. Expect Exxon Mobil to lead the charge.
scoop today that Kazakhstan is exasperated with progress in developing its Kashagan oilfield, the largest discovery on the planet in more than three decades. The upshot - Italy's ENI may lose the prestigious operatorship of the field.
The first part of Chazan's story:
ASTANA, Kazakhstan -- Ratcheting up the rhetoric over a cost-overrun dispute at one of the world's largest oil fields, the prime minister of Kazakhstan said his government might remove Italy's Eni SpA as operator of the project. "We are very disappointed with the execution of this project," Karim Masimov said in an interview in the Kazakh capital, Astana. "If the operator can't resolve these problems, then we don't exclude their possible replacement." Mr. Masimov's comments signify intensifying brinkmanship ahead of a face-off this week between the government and the Eni-led consortium developing the strategically important Kashagan field. Oil-industry observers and regional insiders have said Kazakh authorities aren't likely to take the extreme step of firing Eni as operator because of the project's complexities. But they will probably demand a bigger and possibly earlier take from revenue.
Steve's comment: It is probably true that Masimov's remarks amount to brinksmanship. But Kazakhstan is not the only party exasperated with ENI's performance -- its partners in the supergiant field are also fed up with what now looks like a seven-year delay in first oil, until 2012.
To get the partnership, ENI had to fend off rivals Exxon Mobil and Total. So, quite apart from the Kazakhs' sentiments, there is reason to expect some change in the operatorship, starting with greater formal involvement of ENI's partners. Expect Exxon Mobil to lead the charge.
Labels: Caspian, ENI, Exxon, Italy, Kazakhstan, oil, Russia, Total
3 Comments:
Thx for the update on this. Beside the economic and financial aspects, it also could be possible that the Kazakh government is trying to blackmail the Italian Government on its critical position regarding the Kazakh OSCE Chairmanship in 2009. I don't want to connect everything with politics, but it could also be an aspect.
Michael
I doubt this is an attempt to blackmail Italy into supporting Kazakhstan's bid for chairmanship of OSCE.
Chairing OSCE is of a more symbolic value (probably, mostly for Nazarbayev's ego). In contrast, getting that oil flowing has far more tangible benefits for the country.
Agreed. It's a long-deserved bump in the rear for ineptitude.
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