Kashagan Wed Meeting Not Viewed 'Conclusive' -Eni CEO

ROME Dec 11, 2007 (Dow Jones Newswires)

A meeting in London Wednesday between the consortium developing the Kashagan oil project and the Kazakhstan government following cost overruns and delays in output isn't expected to be "conclusive", said Chief Executive Paolo Scaroni of Eni SpA (E) Tuesday.

"Tomorrow I will go to London and we will have another round of discussions," said Scaroni on the sidelines of a conference in Rome. "I don't think it will be a conclusive meeting, but it will be a step forward."

The consortium developing Kashagan, which is led by Italian oil and gas company Eni, is in a dispute with the Kazakh authorities over the buildup of costs and delays in the startup of production at the massive field in the Caspian Sea.

Scaroni also said the meeting will discuss last week's statements made by Kazakhstan's President Nursultan Nazarbayev.

On Friday, Nazarbayev said the central Asian country wants compensation or an increased stake in the consortium to settle the dispute. He didn't put any figures on the compensation amount.

The sides announced at the start of the month that they signed a memorandum of understanding establishing the framework of a settlement agreement between the parties and set Dec. 20 as the deadline to finalize the terms.

Eni, the sole Kashagan operator and Italy's biggest oil and natural gas company by volume, holds an 18.5% stake in the development consortium, the same as ExxonMobil Corp. (XOM), Royal Dutch Shell PLC (RDSB.LN) and Total SA (TOT). ConocoPhillips (COP) holds 9.3%, while Japan's Inpex (1605.TO) and Kazakh state-owned oil company KazMunaiGas each own 8.3%.

KMG said Dec. 2 that all but one member of the consortium agreed to reduce their stakes in Kashagan to increase its share and involvement in the project. ExxonMobil Corp. was the only company resisting such plans to resolve the dispute, Kazakh Energy Minister Sauat Mynbayev was quoted in news reports as saying earlier this month.

Following media reports saying Kashagan members may decide to abandon the consortium, Eni's CEO said Tuesday "this is always a possibility, but today I don't see it happening."

The Kashagan field, the biggest oil discovery in 30 years when it was found, is estimated to have recoverable reserves of about 13 billion barrels.

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