Initial Agreement Reached On Caspian Pipeline Deal

ALMATY, Kazakhstan -- Russia, Kazakhstan and Oman have reached initial agreement with eight Western, Russian and Kazakh oil firms on shares in construction of a key pipeline to unlock the giant Tengiz field in western Kazakhstan, sources said Monday.


Sources close to the negotiations said the board of the Caspian Pipeline Consortium, now consisting only of the governments of Russia, Kazakhstan and Oman, would meet later this week to confirm the agreement with the eight companies for sale of half of the shares.


President Boris Yeltsin could then sign an accord with Kazakh President Nursultan Nazarbayev during his visit to Almaty on Saturday.


Most negotiating teams initialed a protocol agreement in Moscow over the weekend, said oil executives who asked not to be identified.


The initial agreement offers an outlet not just for Tengiz, a field of more than 6 billion barrels of crude developed by Chevron, Mobil and the Kazakh government, but also for a range of other oil and gas projects in landlocked Central Asia and Azerbaijan. It ends three years of paralyzing conflicts between Chevron, the leading potential client, and Oman, which had insisted on a 25 percent share for less than a quarter of investments.


Oil executives predicted Russia would take 22.5 percent, leaving 20 percent for Kazakhstan and 7.5 percent for Oman. The other half would be shared among Western investors and Russian investors, with a nominal 1.75 percent stake for the Kazakh state company Munaygaz.


Chevron would hold 15 percent, Mobil 7.5 percent, British Gas and Agip of Italy each 2 percent, and Oryx of the United States 1.75 percent; the Russian oil companies LUKoil and Rosneft would take 12.5 percent and 7.5 percent, respectively.


Mobil bought half the Kazakh government stake in the Tengizchevroil venture last week, with Chevron keeping 50 percent.


LUKoil wants to buy in as well.