Kazakhs Say Chevron, Eni Will Be Exempt From Tax Code (Update1)

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05.09.2008 17:06
Информационное Агентство BLOOMBERG. By Nariman Gizitdnov   
Sept. 5 (Bloomberg) -- International oil companies working on Kazakhstan's three biggest exploration projects won't pay more under a new tax code because they invested in the Central Asian country during `difficult conditions.'' 

Eni SpA, Chevron Corp. and BG Group Plc are unlikely to face any changes to their contracts, according to Timur Kulibayev, who heads Kazenergy, an Astana-based oil industry
association.
    Chevron's local operations are known as TengizChevroil LLP while Karachaganak Petroleum Operating BV is the oil venture of BG and Eni.
    ``Tengizchevroil started work in difficult conditions and Karachaganak was built from zero,'' Kulibayev told reporters today in Astana. That's why retaining those contracts is ``just,'' he said.
    Kazakhstan, the holder of 3.2 percent of the world's oil, plans to tax its energy industry more from next year in  accordance with the new fiscal code. The Caspian Sea state, which attracted Chevron and other oil majors in the 1990s by offering favorable conditions, now wants to increase its share of oil income against a backdrop of higher energy prices.
    The tax exemptions must be approved by parliament, said Kulibayev, who is also the son-in-law of Kazakh President Nursultan Nazarbayev. ``We think that the results will be
positive,'' he said.
    Kazakhstan plans to tax oil production at 7 to 20 percent of crude prices from Jan.1, the Economy Ministry said yesterday on its Web site. The government also proposed a new so-called rent tax on crude oil and gas condensate sold abroad: producers face a tax scale, from 7 percent when the price of exported oil is $40 to $50 a barrel to a maximum of 32 percent should oil reach $180 to $200.

--Editors: Stephen Cunningham, Guy Collins.

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