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RIA Novosti

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Kazakh PM warns Eni over breach of contract on major oil field

15:36 06/09/2007
ASTANA, September 6 (RIA Novosti) - The government of Kazakhstan doubts Italy's Eni can comply with the terms of an agreement to develop the country's largest oil field on the Caspian shelf, the Kazakh prime minister said Thursday.

"The slow pace of work at Kashagan and the doubling of operation costs threaten serious socio-economic consequences for Kazakhstan," Karim Masimov said.

The government of Kazakhstan suspended Eni's license to develop the Kashagan oil deposit for three months in late August.

The Kazakh Ministry of Environmental Protection said the operations by the Italian oil and gas giant Eni, engaged in the development of the country's largest Kashagan deposit, could cause disastrous changes to the environment and destroy local flora and fauna.

In late July, the project operator suggested that the deadline to begin commercial production should be shifted from the second half of 2008 to the second half of 2010, with operating costs to be increased from $57 billion to $136 billion.

Kashagan's recoverable reserves were estimated in 2000 at 13 billion barrels of oil.

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