Karachaganak Consortium to cede Stake to Kazakhstan Government - Reuters
The four foreign oil companies developing the Karachaganak gas condensate field have agreed to cede a 10% stake in the consortium to the Kazakh government, Reuters reported on Friday citing sources close to the negotiations.
“The companies said they would transfer 5 percent to the state if it abandons the reintroduced oil export duty or drops its cost overstatement lawsuit of more than $1 billion,” Reuters quoted one source as saying. “Kazakhstan will buy the remaining 5 percent in cash.”
The Karachaganak Petroleum Operating (KPO) consortium, made up of Italian Eni, British BG Group, US Chevron and Russian Lukoil, reportedly discussed the terms of sale on July 19 but they were not final. According to Reuters, the two sides expect to conclude the negotiations in the fall.
The spokesman for all involved parties declined to comment on the ongoing negotiations.
KPO and the Kazakh government have been involved in an increasingly bitter dispute over the Karachaganak gas condensate field, the second largest hydrocarbon project in Kazakhstan and the only one without the participation of the national oil company KazMunaiGas.
KPO faced total claims by the Kazakh government of at least $2.5 billion, including tax and environmental claims, accusation of “illegal earnings” and overstating of costs, and violations of Kazakh immigration laws. KPO meanwhile sued the Kazakh government to recover more than $1 billion in export duties from the state.
KazMunaiGas is likely to seek some control over the expenditures on the planned third phase of development of the field.
KPO is a joint venture held by Eni and BG Group, both of which hold a 32.5-percent stake, Chevron, which owns 20 percent, and Lukoil, which has the remaining 15 percent, according to SRI.