Total in Operator Talks on Kashagan

BloombergKazMunaiGaz's offices in Astana. The company is looking to create a new operator to ship Kashagan oil to Europe.
France's Total held a meeting with Kazakh state-run producer KazMunaiGaz to discuss a replacement for Eni as the operator of the Kashagan field.

KazMunaiGaz president Kairgeldy Kabyldin met Arnaud Breuillac, Total's senior vice president for continental Europe and Central Asia, on Sept. 10 to discuss setting up a new operating company and shipping Kashagan oil across the Caspian Sea to Europe, KazMunaiGaz said Monday.

"That was a working meeting to discuss the changes in participants' shares in the new operating company, when KazMunaiGaz will secure a larger stake, equal to the project's largest foreign investors,'' Arzhan Takachakov, a spokesman at the Kazakh company, said by telephone Monday.

Eni, the Italian oil company that's led the Kashagan project since 1997, agreed in January to cede its role as sole operator of the field after production starts. Eni and partners, including ExxonMobil, Shell and Total, have pushed back the start date four times amid cost overruns and delays. Eni CEO Paolo Scaroni said in July that he expected to pump the first oil before October 2013.

"Our estimate for first oil is 2012," Patrick de la Chevardiere, Total's chief financial officer, said Sept. 10. "I am confident the new contract framework will be able to achieve this."

KazMunaiGaz, Exxon, Total and Shell will join Eni in creating the new operator, with Kazakhstan holding a "controlling function" in the field's future development, Kazakh Energy Minister Sauat Mynbayev said in January.

"The new company will coordinate and approve work," Mynbayev said at the time. "The actual development work will be split up among the partners, for example with one doing the drilling and another building coastal infrastructure."

KazMunaiGaz will double its stake to about 16.8 percent, Takachakov said.