ALMATY (AFP) — Kazakhstan has ended a long-running conflict with a group of Western majors over ownership of the Kashagan oil field, one of the world's largest new deposits, state oil company Kazmunaigas said Monday.
Kazmunaigas "is pleased to announce that agreement has now been reached with the entire Kashagan consortium," the company said in a statement.
Kazakh Energy Minister Sauat Mynbayev told reporters in the capital Astana that the deal would double the state company's stake in the consortium.
Kazmunaigas will pay 1.78 billion dollars (1.2 billion euros) to boost its share of the field from 8.33 to 16.81 percent at the expense of its foreign partners, Mynbayev said.
In addition, Kazakhstan would receive around 20 billion dollars from the project before the end of the production sharing agreement in 2041, Mynbayev said, without giving precise details on the payment mechanism.
Since August the Kazakh government has demanded a bigger stake for Kazmunaigas to make up for extensive delays and cost overruns it blamed on the foreign partners.
"The balance of justice has been restored," Kazakh President Nursultan Nazarbayev said in a statement after the deal.
The offshore Caspian Sea field, which boasts the largest oil reserve found in the world since the 1960s, has long been seen by the Kazakh government as key to its plans to become a top global oil exporter.
Kashagan will eventually produce 1.5 million barrels of oil per day.
Under the deal, Italy's ENI, France's Total, ExxonMobil and Anglo-Dutch Shell will see their stakes fall from 18.52-percent to 16.81 percent, in line with Kazmunaigas, Mynbayev said.
ConocoPhillips, also of the United States, and Japan's Inpex will see their respective stakes of 9.26 and 8.33 percent reduced proportionally, he said.
The partners will now "draft and execute the appropriate amendments" to the production sharing agreement, while operations will proceed under the new ownership structure, Kazmunaigas said in its statement.
The dispute over the project revolves around a delay in the start of production from 2005 until 2010 and a massive rise in the estimated overall cost, from 57 billion dollars to 136 billion dollars.
The date for the start of production at the field has now been put back to the end of 2011, Energy Minister Mynbayev said Monday.
The Kazakh government had threatened it could force changes to the Kashagan contract if the negotiations with Western investors failed.
ENI, which leads the consortium, said the delays were due to technical problems on the offshore field. The crude from the field contains a gas that must be extracted from the oil, the Italian company said.
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