Kashagan: Two Ominous Notes
Kazakhstan's Prime Minister Karim Massimov has made it official: The country is seeking at least to share control of the supergiant Kashagan oilfield. Two items in his announcement today were of special note: The decision comes from the very top and was not dreamed up by some ambitious underling; and Kazakhstan is prepared with an unspecified second strategy should its demand be refused.
The development is important not just for the single field, though it is the largest found anywhere on the planet in three decades. It is also a weather vane for how Kazakhstan will treat the other two supergiant projects in the country -- the Tengiz and Karachaganak fields -- and whether the assertive practice will spread over the Caspian to Azerbaijan.
If the Italian-led consortium refuses to grant Kazakhstan co-operatorship of Kashagan, Massimov said, "We have Plan B. I'll tell you about that later."
Here is the first paragraph of the Financial times story: Kazakhstan demanded greater control over the giant Kashagan oilfield in the Caspian Sea on Thursday, complaining that inadequate management of the project by a foreign consortium led by Italy’s Eni had damaged the Central Asian republic’s economy and reputation as a reliable global energy supplier. Read the FT piece. Here is Reuters. And here is the AFP story.
Steve's comment: Often in Kazakhstan, as well as in Russia and elsewhere in the former Soviet Union, it is not clear whether a middle-ranking minister is speaking for his aspiring self, or fulfilling orders from above.
In this case, Massimov was crystal clear: President Nazarbayev is playing general, and he wants to exert equal control over what happens at the field. Here is the key quote: "According to the Kazakh president's orders and demands, KazMunaiGas should be a co-operator. I will not say anything about percentages at this stage," Massimov told reporters.
Therefore, the companies have very little wiggle room.
But what if they should choose to try to finesse that little bit of wiggle space that they might have? Plan B.
What is Plan B? One can only conjecture, but it can't be positive for Eni or the consortium.
As a reminder: This is not a pure example of national assertiveness. The consortium itself invited such action through its ineptness -- being at least five and probably seven years late in bringing first oil to market, and as of right now racking up double the development costs.
The development is important not just for the single field, though it is the largest found anywhere on the planet in three decades. It is also a weather vane for how Kazakhstan will treat the other two supergiant projects in the country -- the Tengiz and Karachaganak fields -- and whether the assertive practice will spread over the Caspian to Azerbaijan.
If the Italian-led consortium refuses to grant Kazakhstan co-operatorship of Kashagan, Massimov said, "We have Plan B. I'll tell you about that later."
Here is the first paragraph of the Financial times story: Kazakhstan demanded greater control over the giant Kashagan oilfield in the Caspian Sea on Thursday, complaining that inadequate management of the project by a foreign consortium led by Italy’s Eni had damaged the Central Asian republic’s economy and reputation as a reliable global energy supplier. Read the FT piece. Here is Reuters. And here is the AFP story.
Steve's comment: Often in Kazakhstan, as well as in Russia and elsewhere in the former Soviet Union, it is not clear whether a middle-ranking minister is speaking for his aspiring self, or fulfilling orders from above.
In this case, Massimov was crystal clear: President Nazarbayev is playing general, and he wants to exert equal control over what happens at the field. Here is the key quote: "According to the Kazakh president's orders and demands, KazMunaiGas should be a co-operator. I will not say anything about percentages at this stage," Massimov told reporters.
Therefore, the companies have very little wiggle room.
But what if they should choose to try to finesse that little bit of wiggle space that they might have? Plan B.
What is Plan B? One can only conjecture, but it can't be positive for Eni or the consortium.
As a reminder: This is not a pure example of national assertiveness. The consortium itself invited such action through its ineptness -- being at least five and probably seven years late in bringing first oil to market, and as of right now racking up double the development costs.
