Reuters AlertNet Lite - Italy PM to visit Kazakhstan as oilfield row grows

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Italy PM to visit Kazakhstan as oilfield row grows

13 Sep 2007 12:59:04 GMT
Source: Reuters

ROME, Sept 13 (Reuters) - Italian Prime Minister Romano Prodi will visit Kazakhstan on October 7-9, amid an escalating row between the Central Asian state and an Italian-led consortium over the giant Kashagan oilfield.

Prodi's office issued a statement on Thursday giving the dates of a visit which had been widely expected since Kazakhstan suspended operations at Kashagan in the Caspian Sea last month.

Kazakhstan is demanding that the Eni-led <ENI.MI> consortium pays billions of dollars in compensation, citing ecological violations, cost overruns and repeated delays.

Eni Chief Executive Paolo Scaroni met the Kazakh Prime Minister Karim Masimov and his energy minister in Astana this week to be told that delays in developing the oilfield were harming the country's growth prospects and development plans.

Emboldened by high oil prices, resource-rich Kazakhstan has long been mounting pressure on the group of mostly Western oil majors working on the Kashagan project, which is Astana's entry ticket to the club of top 10 global oil producers.

Kazakhstan accuses the consortium of violations ranging from environmental issues to fire safety rules, triggering talk among industry analysts about so-called resource nationalism and harmed investor confidence.

Last week, Masimov demanded a leading role for state energy firm KazMunaiGas [KMG.UL] in running the field -- the biggest oil discovery in the last three decades -- after Astana had threatened to replace Eni as operator.

Italy's government has talked of hopes for a breakthrough in negotiations before Prodi's visit.

The other participants in the Kashagan consortium are Royal Dutch Shell <RDSa.L>, Exxon Mobil Corp <XOM.N>, Total <TOTF.PA>, ConocoPhillips <COP.N>, Japan's Inpex Holdings Inc <1605.T> and KazMunaiGas.

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Last updated:Thu Sep 13 13:00:26 2007