Kazakh Minister dismisses environmental concerns over suspended oil-field operations

Kazakh Minister of Energy and Mineral Resources Sauat Mynbaev announced on October 2 that he sees “no grounds” to suspend operations at the offshore Kashagan oil field run by the group of major Western oil companies amid environmental concerns.

“Let’s accept a compromise decision: after the date of commercial production is set, we will demand a plan on sulfur stocks by that date,” said Mynbaev while speaking at a press conference in Almaty.

He explained that “the environmental complaints” lodged against the Italian-led consortium in charge of operations would most likely be resolved by the signing of a “memorandum” between the Environmental Protection and Emergency Situations ministries and the consortium.

“If we sign this memorandum, nothing should prevent work at the project from continuing in its present form,” he said.

But the government also seeks financial compensation of more than $10 billion for the delays in production at Kashagan a topic Mynbayev did not touch on.

He also noted that the consortium “accepted part of the complaints” and is “currently in the process of rectifying them,” stressing that “we do not see any reasons to suspend the project because of the environment.”

In late August, the government suspended work at the Kashagan oil field for three months due to alleged violations of environmental-protection laws, as well as repeated delays and cost overruns by Eni, the Italian leader of the consortium in charge of operations.

Relations between the government and the Eni-led consortium have been strained by the consortium’s decision to push back the start of production at the oil field from 2008 to late 2010.

The projected total cost for developing the Kashagan field has more than doubled from initial estimates of $57 billion to $136 billion. The Kashagan field holds between 7 billion and 9 billion tons of proven reserves, making it the single-largest oil field discovered in the last three decades and the fourth- or fifth-largest deposit in the world.

(with material from AP, RFE/RL)

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