Bill Letting Kazakh Govt Quit Oil Contracts Seen Passed in September

ALMATY, Kazakhstan Sep 14, 2007 (Dow Jones Newswires)

An amendment that will give the Kazakh government the right to pull out of natural resources contracts if there is a threat to national security and national economic interests is to be adopted in the next two weeks, a Kazakh lawmaker told Dow Jones Newswires.

Valeriy Kotovich, one of the lawmakers who initiated the amendment, said the government has already expressed its support for the amendment which also aims to help Kazakhstan in its dispute with the Eni SpA-led (E) consortium over delays and rising costs at the giant Kashagan oil field in the Caspian Sea.

"The amendment will give the government the right to annul contracts on strategic fields, not only oil and gas if the conditions of the contracts are not being complied with and there is a threat to national security," Kotovich said by telephone from the capital Astana, adding that the amendment would certainly apply to the Kashagan dispute.

"The amendment should give the government more room in solving the Kashagan questions," Kotovich said.

The Kazakh government and Eni are currently holding talks on trying to agree terms for the further development of Kashagan. The talks will last until Oct. 22.

The postponement of the start of production and rising costs have angered the government. It has threatened to strip Eni of the operator's role. Kazakhstan wants "adequate compensation" for the delay and the inclusion state oil and gas company KazMunaiGas as a joint operator of the project.

Copyright (c) 2007 Dow Jones & Company, Inc.

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