Kazakhstan May Pay Up to $1.1 Billion for Karachaganak Stake

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04.10.2011 18:26

Kazakhstan may pay $700 million to $1.1 billion for 10 percent of the Karachaganak oil venture led by BG Group Plc (BG/) and Eni SpA (ENI), said Timur Kulibayev, the head of the state wealth fund, Samruk-Kazyna.

The foreign partners, which include Chevron Corp. (CVX) and Russia’s OAO Lukoil, must settle issues with the Oil and Gas Ministry before an agreement is reached, Kulibayev told reporters today in Astana, the Central Asia nation’s capital.

Kazakhstan is seeking to enter Karachaganak, the only major oil development in which the state doesn’t hold a stake, as it boosts control of its oil resources. The government has threatened tax claims and fines for environmental violations and cost inflation, while saying it will approve the budget for Karachaganak’s expansion only after joining the project.

“This will be a package deal,” Oil and Gas Minister Sauat Mynbayev said today. Yesterday, Mynbayev said the government won’t drop tax claims against the venture during their negotiations.

The Karachaganak partners expect to reach an agreement on expanding the project with the Kazakh government this year, Chris Finlayson, BG’s executive vice president and managing director for Europe & Central Asia, said yesterday. He declined to comment on the stake or tax claims. 

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