Why Eni is Russia's and Kazakhstan's Best Friend

Over the last several years, ENI has grown from a mom-and-pop Italian would-be into one of the largest oil majors in the world. It is the most successful western oil company in both Russia and Kazakhstan, winning an exclusive perch for example as Gazprom's partner in natural gasfield development in Russia.

An example of why that is the case came over the weekend in a press scrum with ENI CEO Paolo Scaroni. ENI faces terrible trouble in Kazakhstan because it is going to be at least five years -- and probably seven years or more -- late in producing first oil at the Kashagan oilfield. Kashagan is the biggest oil find on the planet in three decades, and could easily produce 2 million barrels of oil a day (the partners currently say their production sights are set lower, but if an independent export channel opens up, look for the higher figure).

Talks are to start soon in which Kazakhstan is probably going to ask for a higher share of the revenue. The boilerplate oil company response to such temerity is shock and horror before agreeing to some of the demands.

Not Scaroni. Here is what he told reporters over the weekend: "The Kazakh government intends to renegotiate the contract and this does not surprise us. We think it's normal because the contract was born when oil prices were much lower." Read story

Thus Scaroni, in acknowledging validity to Kazakhstan's claims, takes the edge off the talks from the outset. Given ENI's record in the former Soviet Union, look for an amicable outcome. Some of the Italian company's partners want to force it to relinquish its role as operator, but as long as it is on friendly terms with Kazakhstan, it is in the driver's seat.