(Adds background, Eni, Shell no comment)
By Raushan Nurshayeva
ASTANA, Dec 2 (Reuters) - All but one member of an Eni-led (ENI.MI) consortium developing the huge Kashagan oilfield in Kazakhstan have agreed to raise Kazakh state oil company KazMunaiGas’s stake in the project, the company said on Sunday.
Kazakhstan has been at loggerheads with the Eni-led group over cost overruns and production delays at the Caspian Sea field — the biggest oil find in three decades. On Saturday, the sides set Dec. 20 as the deadline to find a settlement.
“According to a new memorandum of understanding, all consortium members except one have reached principal agreement to hand over parts of their stakes in the project necessary to raise interest to a level of a large participant,” KazMunaiGas said in a statement.
The Kazakh company did not say which company opposed the agreement or what percentage stake it was aiming at. It was also unclear whether the transfer of shares could go ahead without this company’s approval.
Oil executives said they expected the U.S. companies to take a tougher line with the government than their European and Japanese partners, who have made such concessions before, in Russia and Venezuela.
Exxon and Conoco pulled out of Venezuela rather than give in to Caracas’s demands for greater control of oil projects.
In October Interfax news agency reported that talks on a Kashagan settlement had stalled as Exxon was blocking the expansion of the state’s share in the project.
An Eni spokesman declined comment, as did a Shell spokeswoman. The other companies could not be reached for comment.
Apart from raising KMG’s stake, Kazakhstan has demanded billions of dollars in compensation from the consortium.
It has, however, scaled down its demands in recent months. A source close to the talks said on Friday Kazakhstan currently sought $7 billion as opposed to over $10 billion in September.
KazMunaiGas, in its Sunday statement, said the group would finalise the details of the stake transfer later this month.
“By Dec. 20 the sides should finish talks on handing over parts of their stakes and raising KMG’s role in operational activities as well as on other additional conditions set in the first memorandum of understanding signed on Oct. 22,” it said.
Kazakhstan has accused the consortium of a host of violations, including ecological, and blamed its management for allowing costs to spiral and delaying the start of production.
Kashagan, at the heart Kazakhstan’s ambitious plan to triple oil output by 2017, is now due to start pumping oil in 2010, instead of the original 2005 target. Its costs have escalated to $136 billion from $57 billion. (Additional reporting by Tom Bergin, writing by Maria Golovnina, editing by Will Waterman)