Clare Nuttall in Astana -
Following months of speculation over the US energy major's role, a Kazakh official stated on Ocotber 2 that ConocoPhillips is planning to quit the consortium developing the giant offshore Kashagan project.
Speaking to journalists during the Kazenergy conference in Astana, Oil and Gas Minister Sauat Mynbayev said that the Kazakh government holds pre-emptive rights to ConocoPhillips' 8.4% stake in the North Caspian Operating Company (NCOC). "They have an intention of selling their stake," Mynbayev said, claiming that although no public statement has been issued, the US company has informed its partners in the consortium that it plans to sell.
"The government enjoys the preemptive right to purchase," the minister said. "All the consortium member companies do have such a right." With a 8.4% stake, ConocoPhillips is one of two junior partners in Kashagan alongside Inpex (7.6%). Eni, ExxonMobil, Shell and Total all hold a 16.8% share, with state-owned KazMunaiGas holding a similar stake. Mynbayev added that the production sharing agreement governing the field will not be affected by ConocoPhillips's decision to quit.
There have previously been reports that ConocoPhillips was considering selling its 8.4% stake for around $8-10bn in 2013, while both Exxon and Shell are said to be keen to increase their stakes and to take operational control during the second phase of development, which is currently under discussion between the consortium partners and the Kazakhstani government. Meanwhile, Chinese National Petroleum Corp (CNPC) is also understood to be keen to buy into Kashagan, but Chinese ownership of natural resources in Kazakhstan is a sensitive political issue.
The Kashagan field is the world's largest hydrocarbons discovery worldwide in the last 30 years, and has the potential to boost Kazakhstan's oil production and substantially increase revenues for the government. However, due to the technical difficulties in developing the offshore field, the start of production has been put off several times and costs have spiraled. Commercial production at Kashagan is now expected to start in mid-2013, Mynbayev said at the conference.
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