The Kashagan field, already one of the world’s costliest oil development projects at an estimated average of US$1 billion per year, has the potential to produce 1.2 million bpd.
In a statement Kazakhstan Energy Minister Vladimir Shkolnik has declared, “[My] government [is] negotiating with the Kashagan consortium to acquire a 16.7% share that BG Group announced last spring it would sell. In accordance with our legislation, pre-emptive rights belong to us. If Kazakhstan has direct participation in such a project, the project will move much faster.”
The problem is BG wants to sell its stake to China’s Sinopec and CNOOC for US$1.23 billion. At the same time, some of BG’s partners in the consortium (Agip, ExxonMobil, Shell, Total and ConocoPhillips) have chosen to exercise their right to pre-empt the sale and buy BG’s stake and divide it amongst themselves.
It is also believed the consortium do not want the Kazakh government as an active partner; although the parent company of Agip, Eni, has made the right noises and said it was “ready to work” with Kazakhstan. Besides, the consortium has declared the contract signed with the Kazakh government gives them first dibs on divvying up.
According to BG Group spokesperson Petrina Fahey, “BG is in talks with the six other companies that have stakes in the project. The partners have a right to pre-empt, and we have a right to assign our share within the consortium.”
And Shkolnik’s reply? A resounding “nyet”.
“Does a country have a right to purchase a stake in a project that is its own? Of course, it has the right to buy such a stake,” said the minister in an interview with The New York Times. “The asset belongs to the state anyway,” he added.
