Kashagan deal good for Western group -- analysts
ALMATY, June 30 |
ALMATY, June 30 (Reuters) - Western companies developing the giant Kashagan oilfield struck a good deal when they signed a memorandum on the project's future with Kazakhstan's government last week, analysts said on Monday.
Last week, Kazakhstan and the Kashagan consortium agreed to put off the start of commercial output at the field until 2013, ending a 10-month stand-off over the $136 billion project [ID:nSP233929].
In return, the consortium agreed to prevent further cost overruns, pay floating royalties linked to the oil price and have the Production Sharing Agreement (PSA) expire in 2041 -- a date linked to the previously expected production start.
"The government could have acted a lot tougher," said Dmitry Alexandrov, an analyst with Russian investment company Financial Bridge. "Just look at Russian or Venezuelan projects."
Alexandrov said he saw the deal as beneficial for both the government and the consortium that unites Eni (ENI.MI), Royal Dutch Shell Plc (RDSa.L), Exxon Mobil Corp (XOM.N), Total (TOTF.PA), ConocoPhillips (COP.N), Kazakh state oil company KazMunaiGas [KMG.UL] and Japan's Inpex Holdings Inc (1605.T).
"The investors now have the terms... that are in line with today's reality, not that of the 1990s, when the PSA was signed," Alexandrov said.
Artyom Konchin, an analyst with Russian brokerage UniCredit Aton, saw the deal as favourable for Western companies.
"They have got the carrot and they might avoid the stick," Konchin said. "This was the last delay the Kazakh authorities could tolerate without imposing sanctions, which is good for investors."
Kashagan is key to Kazakhstan's plans of boosting oil output to 150 million tonnes from the current 68 million tonnes within the next 10 years and joining the ranks of the world's top 10 oil producers. (Reporting by Mariya Gordeyeva; Writing by Olzhas Auyezov)
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