Processing Magazine

Kazakhstan suspends oil project

August 28, 2007

The Associated Press reports that Kazakh officials have ordered operations at the country''s largest oil development suspended and the Finance Ministry announced a criminal investigation, news reports said, signaling growing unhappiness with delays at the project led by Italian oil giant Eni SpA. The move against the developer of the Kashagan field comes after months of warnings by Kazakh officials against the Eni-led consortium, which also includes Total SA, Exxon Mobil Corp., Royal Dutch Shell PLC and other companies. The government has been unhappy with the consortium since it announced earlier this year that the start of production at the northern Caspian Sea field had been pushed back from 2008 until 2010. The consortium also said project''s costs would more than double to US$136 billion (euro100 billion). The delays are troubling to Kazakhstan because it pushes back the date when the government can expect revenues from the project.