One dive chronicle

There is a lot in common between these two events. In both cases there is about environment protection authorities, fiscal and power structures.

But, from the other side, the projects are a lot more different in its meaning and volume. If Russian problems with "Sakhalin-2" were only about one natural resource using company, in Kashagan case there are several companies.

In any case, Kashagan scandal could not be compared on its size with local scandal such as "Sakhalin-2".

On August 28, right after the massed attack on the consortium was made, there was a hope expressed that from Kazakhstani side the discussion of the current situation on Kashagan project will be executed according to the conditions of the agreement on production division on Northern Caspian project.

The accent is understandable enough. "The operator works in complete interaction with plenipotentiary body and waits that any discussion will be executed according to the conditions of the agreement on production division on Northern Caspian project", - was stated in Agip KSO information. It was also stating that Agip KSO comments by saying these grown expenses of the project: "by now it is too early to propose or comment any expenses evaluation taking into account uncertainty factors connected to the whole oil field development and future market situation".

Overdid with promises

In fact Italians overrated its opportunities, when instead of operating promised that will be able to manage the projects in agreed terms. Kashagan is a difficult project which could be characterized by extreme climatic conditions, high concentration of hydrogen sulphide and high pressure in this combination which was not met in the sphere before.

Italians faced a lot of technical problems, one of which is a concept of extraction. To achieve planned extraction of 1,5 million of barrels a day it is necessary to measure all risks. In the first turn, they are connected to high pressure of layers, which could lead to undesirable consequences while developing. From the other side, extremely poisoning mixtures separated during extraction process put before the consortium much difficult tasks.

According to the information made on August 28, the consortium plans to finish research on concept definition by the end of 2007 or by the beginning of 2008 and choose one concept to start preliminary projecting.

Commenting information from different mass media on possible change of the consortium staff, Agip KSO stated that by now "could not and have no intention do any assumptions related to the consortium staff".

LUKoil step and 10 billions

Right after Kazakhstani authorities declared war to the consortium, the society began actively exaggerate rumors that Astana "started hunting period" with an ulterior motive. It was about that authorities already held preliminary negotiations with those who could replace or become co-partners of Italians in the project. Among the most favorable candidates there is Russian "LUKoil".

"LUKoil" head Vagit Alekperov giving the interview on August 28 to "Interfax" stated that National Company "LUKoil" did not get proposal from Kazakhstan on Kashagan oil field development project joining.

"No, we did not get such proposals", - said diplomatically Alekperov. - "This is acting project, and we think it works well".

Economic loss caused to Kazakhstan by Kashagan oil field development operators is calculated for more than USD 10 billion. This was said by the beginning of September to Reuters by RK Finance vice Minister Daulet Ergozhin.

Let us remind that Ergozhin executes negotiations with the consortium as an observer responsible for finances. However there is no presupposition to count stated amount as final.

"This is about dozens of billion, - underlines Ergozhin. - Of course, it is more than USD 10 billion, but the project is for 40 years. This is not a year. This is my private calculation. The amount may progress, now we calculate because it may influence economics development, GDP".

Further on Ergozhin makes sure that everybody understands, that Kazakhstan need not only money, but more important - project structure changes. "The question is not about money, - he mentioned. - We do not see clear structure how the project is going to be developed. The question is about shareholders. Operator's mistakes are the mistakes of every shareholder. When we talk about not satisfying work, we mean all contracting organizations".

The eyes of fear see danger everywhere

European Union supported operator's of the project, Japan called Kazakhstan government claims to Western investors "the echo of Russian authorities pressure related to "Sakhalin-2"", where Royal Dutch Shell as operator was forced to step back for state company "Gasprom". In this connection Tokyo called to fight "resource nationalism".

Answering on these claims, Ergozhin said the following. "The West begins to represent this as unscrewing hands, - he stated. - Nobody unscrews anything to none. Kazakhstan has many examples when investors fulfill the legislation and works normally. The answer is simple: fulfill the law, business-ethics, and you will be fine".

After the announcement on the project stoppage Eni reps at first stated that they will come by the beginning of September for talks with Kazakhstan government, but later on rejected.

From the other side, the consortium shareholders behave themselves differently. Thus, for instance, when by the beginning of September talks on Kashagan started between the consortium and Kazakhstani government, ConocoPhillips send to it its rep that has lower rank. He was not allowed to enter the negotiations' hall. Other participating in the consortium companies were presented on the talks by its vice presidents.

"We think that ConocoPhillips does not see Kashagan as its important asset sending to the talks lower rank rep then other contracting companies, - stated the course close to negotiations. - Kazakhstan expressed its dissatisfaction by this".

60 days ultimatum

"The period of time given to companies to present their proposals to solve debates on the project is close to the end. Parties have 60 days during which negotiators should defined something about the project", - stated further on the sources.

Kazakhstani government has strong intention to bring the case to arbitrage if parties of the consortium do not do any practical proposals to take the project of the dive.

Meanwhile "KazMunaiGas" (KMG) hired Curtis as judicial consultant to solve disputes on Kashagan project. Curtis advocates worked beforehand in Bolivia and Venezuela once authorities of these countries stated about oil nationalization.

On Wednesday, September 5, it became known that big guns come into force. Kazakhstan Prime Minister promised next day to make statement on Kashagan. "Tomorrow I make official statement of the government according the Kashagan project", - he said in Astana to journalists' interview in the pause during the round table with government members and businessmen.

September 6 was so-called Rubicon in Kashagan question. National Oil and Gas Company KMG should become co-operator on Kashagan, said Kazakhstan Prime Minister Karim Massimov.

At this PM referred to the president's order. "According to those orders given by the president, - underlined Massimov, - KMG should co-operate on Kashagan".

"B" Plan

We could perfectly assume that Kazakhstani government thinks about Kashagan not the first day. Most likely, it started work on the project right after it was formed. It is evident from the fact how wholly and emphatically Kazakhstan position looks like when there is uncovered pressure from the West.

"We think, - confirmed Massimov, - that economic balance was destroyed not for Kazakhstani government, corresponding requirements were sounded; now we hold friendly talks to solve the situation. If they (Agip KSO participants) will not agree with Kazakhstan claims, we have "B" plan, I will reports on it later on".

Evidently, such strict statement made by Kazakhstani Prime Minister touched Italians on the raw. Italian oil and gas extracting company Eni managing board on Friday, September 7, the day after the Kazakh PM's statement, gathered to discuss problems related to Kashagan realization.

As stated in the information deliver by Eni, company's director Paolo Scaroni reported on his forthcoming visit to Kazakhstan on the invitation of the Prime Minister.

To all appearances, Kazakhstani government decided to wait with "B" plan execution on Kashagan while Italian Eni chair will not visit Astana. Made public by Ergozhin information about USD 10 billion of losses transformed into "dozens of billion of dollars of losses".

On September 8 it was stated that Kazakhstan calculated losses from Kashagan industrial extraction start delay in the National sector of the Caspian Sea.

The day after, on September 9, Kazakhstani Prime Minister expressed his opinion. "Kazakhstani side has calculated its losses, - stated Massimov. - I think the consortium also calculated the losses. More specific data I am not able to call because it is a subject for commercial talks".

One may assume that during negotiations with Paolo Scaroni the compromise will be finally found and it will suit both sides.

Otherwise, as Kazakhstani Prime Minister has promised, the mysterious "B" plan will be activated. If it is connected to termless moratorium on Kashagan project which Kazakhstani authorities could call, it is possible that not only shareholders could suffer, but the countries' image in the world.

Illustration provided by pics.rbc.ru