Kazakhs close $1.3 bln case against BG, ENI group

May 20. Reuters. ASTANA

* Another $708 million case still being investigated
* Consortium also includes Chevron, LUKOIL
* Sources have said govt wants stake in consortium

Kazakhs close $1.3 bln case against BG, ENI groupKazakhstan has closed a $1.3 billion cost overstatement case against the BG and ENI-led KPO consortium developing the Karachaganak oil and gas field, the financial police said on Thursday.

“The criminal case opened on charges of fraud has been cancelled by prosecutors,” spokesman Murat Zumanbai told reporters.

KPO, which also includes U.S. company Chevron and Russia’s LUKOIL, operates the field under a production-sharing agreement with Kazakhstan.

Zumanbai said a separate case in which the consortium stands accused of illegally earning $708 million in 2008 by producing more oil and gas than originally agreed with the state was still being investigated.

Sources close to the talks between the consortium and the Kazakh government earlier told Reuters that Kazakhstan was seeking a stake in the consortium, while analysts suggested the state was hoping to acquire the stake without paying.

The Karachaganak developments mirror the case of Kashagan, another oil field developed by foreign energy majors, where the government acquired a stake after accusing the consortium of environmental violations, delays and cost overruns.

Last month, Kazakhstan accused KPO of violating immigration laws.

The consortium said previously it acted in accordance with Kazakh laws and agreements it has with the Kazakh government.