Kazakhstan hopes to settle Karachaganak disputes by June, says minister

April 22. Central Asia Newswire

Kazakhstan hopes to settle Karachaganak disputes by June, says ministerKazakhstan hopes to settle by June its long-standing disputes with the foreign-led energy consortium that operates the giant Karachaganak energy field, a top Kazakh official said on Thursday.

Oil and Gas Minister Sauat Mynbayev was speaking to reporters in the capital Astana on a dispute with the Karachaganak Petroleum Operating Group (KPO), led by Britain’s BG Group and Italy’s ENI.

“Each of the sides clearly understands what it wants,” the minister said, without providing details on the energy ministry’s demands, the Reuters news agency reported.

He said the two sides will meet next on May 10.

“I hope that we will try to reach agreement in the first half of the year,” Mynbayev said.

Kazakh authorities have levied several punitive measures against KPO for allegedly flouting ecological and tax regulations and overstating operating costs.

The Astana government in January slapped fines amounting to $27 million on the consortium for violating environmental rules.

Last October the tax authorities made a $1.2 billion claim on KPO for alleged failure to pay taxes due from 2005-08.

The Karachaganak project produces almost half the country’s gas and 18 percent of its oil.

BG and ENI each own a 32.5 percent stake in the consortium, U.S. major Chevron holds 20 percent, and Russia’s LUKOIL has a 15 percent stake.

Kazakh state fuel producer KazMunaiGas last year said it wants a share of the lucrative project and has been pressing KPO to part with 10 percent.

Plans to launch a third phase of development that could double production from 133.7 million barrels of oil equivalent in 2010 are currently on hold.

“The sides are waiting for a final settlement of their mutual claims, and once the talks on settling old claims have been finished, I think the consortium will, within a brief period, formulate its proposals on the third stage,” Mynbayev said.

KPO consortium officials were not immediately available for comment, the news agency said.