Kazakhstan and partners sign final Kashagan deal

By Raushan Nurshayeva

ASTANA (Reuters) - Kazakhstan and a group of Western oil majors developing the huge Kashagan oilfield signed the final agreement on the future of the long-delayed project on Friday, capping months of hard negotiations.

The stand-off over the Eni-led field started in August 2007 when the government accused its shareholders of allowing costs to spiral to $136 billion (84.3 billion pounds) from $57 billion and missing the original 2005 target to start production.

The row has spilt over into international politics, unnerving foreign investors and prompting talk of resource nationalism in Kazakhstan -- a Caspian country seen by Europe as a new alternative to Russia as a source of energy.

The final deal, although largely in line with prior preliminary agreements, draws a line under the disagreements.

It offers relief to other consortium members including Royal Dutch Shell, Exxon Mobil, Total, ConocoPhillips, Kazakh state-run oil company KazMunaiGas and Japan's Inpex Holdings.

KazMunaiGas is to double its stake to 16.81 percent in Kashagan -- a move analysts have interpreted as part of Kazakhstan's push to raise its weight in the strategic energy sector currently dominated by Western oil companies.

Other members would cut their stakes on a pro-rata basis.

Italy's Eni will pass its lead role as the project operator to the new North Caspian Operating Company (NCOC) in January 2009. Shell and KazMunaiGas are due to manage production operations after the start up of the first phase.