The central Asian republic of Kazakhstan is an increasingly important source of oil and gas production for U.S. energy companies. In recent years, it has also been a source of controversy.
James Giffen, a U.S. investment banker, was indicted in March this year on bribery charges. He is accused of transferring $78 million in payments in 1996 from Mobil Oil Corp. to senior Kazakhstan government officials, including President Nursultan Nazarbayev and oil minister Nurlan Balgimbaev.
Prosecutors said Giffen paid off senior officials in six separate oil transactions, including Mobil's $1.05 billion investment in Kazakstan's Tengiz field. In April, former Mobil executive J. Bryan Williams was indicted for taking a $2 million kickback in connection with the Tengiz transaction.
At the time federal prosecutors said Mobil, which later merged in 1999 to form Exxon Mobil Corp. was being subpoenaed as part of the bribery investigation. Exxon Mobil said it had no knowledge of any illegal payments.
ChevronTexaco, a 20 percent investor in Tengiz, also denied any wrongdoing. "All payments made by ChevronTexaco were properly made to the government of Kazakhstan as instructed by the government, in the government account, in conformance to applicable U.S. and local laws," Hodgson said, reading from a statement.
ChevronTexaco holds 50 percent of the Tengizchevroil partnership, which operates oil fields by the northeast shores of the Caspian Sea.
Expansion at the Tengiz fields was delayed last November amid a heated dispute between ChevronTexaco and Kazakhstan over the terms of an investment contract. In April, the company paid the government $210 million for assets and infrastructure acquired in 1993.
Following the next phase of development, the venture is expected to produce 430,000 to 500,000 barrels of oil per day.
ChevronTexaco also holds a 20 percent stake in the Karachaganak natural gas fields, which when fully developed is expected to produce 1.4 billion cubic feet per day. Predecessor company Texaco Inc. in 1997 signed a production sharing agreement with Lukoil, Agip, and BG Group.
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