Kazakhstan threatens to alter Western oil deals

Jan 26. Reuters. ASTANA

Kazakhstan threatens to alter Western oil dealsKazakhstan threatened on Tuesday to rewrite key Western-run energy projects to implement new tax rules, in a move likely to send jitters among foreign investors operating in the Central Asian state.

The oil-rich Caspian nation has sought to raise its weight in the strategic energy sector dominated by Western oil majors, and raise additional budget revenues through new taxes and export duties.

Addressing the lower house of parliament, Energy Minister Sauat Mynbayev said projects such as the Chevron-led Tengiz oil field, as well as Karachaganak and Kashagan would be affected as a result.

“If we abandon tax exemptions for these three or four projects … then of course that means only annulling them because it’s quite a radical review,” he said, without naming the fourth project.

Under current rules, most Western energy majors working in Kazakhstan under production-sharing agreements are not liable to changes in the Central Asian country’s tax legislation.

President Nursultan Nazarbayev said this month that foreign projects in industries such as oil and gas may lose their immunity from changes in tax legislation.

“It’s not an easy question. Of course there is an order so we will (implement) it,” Mynbayev told members of parliament.

Kashagan – the world’s biggest oil discovery in decades – is run by Exxon Mobil Corp , ConocoPhillips , Royal Dutch Shell Plc , Eni , Total , KazMunaiGas and Japan’s Inpex Holdings Inc .

Karachaganak, at the centre of a separate dispute with the government over costs and other issues, is operated by a consortium that includes BG , Eni , Russia’s LUKOIL and U.S. firm Chevon .