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. Last Updated: 07/27/2016

Kashagan May Face Long Wait

ASTANA, Kazakhstan -- Kazakh Environment Minister Nurlan Iskakov said Sunday that the government might prolong its suspension on operations at the Kashagan oil field if a consortium of Western oil majors developing it did not "improve its record."

Kazakhstan suspended work at Kashagan on Aug. 27, stepping up pressure on its Western operators, led by Eni, over delays and cost overruns.

"According to legislation we will be looking into this issue for three months. They should improve their record in three months," Iskakov said. "If they improve, we'll look into it then." Asked whether the suspension could then be prolonged if that did not happen, he said, "Yes."

The AgipKCO consortium also includes Shell, Exxon Mobil, Total, ConocoPhillips, Japan's Inpex and Kazakh state oil company KazMunaiGaz.

Kazakh officials have accused the group of a host of violations, including environmental issues and fire safety, in a move seen by analysts as an attempt to get higher revenues from the project.

A source close to the talks said Kazakhstan was expecting the Eni-led group to come up with a proposal outlining "an adequate compensation" by Sept. 5.

Iskakov said talks on the environmental issue were already under way between his ministry and the consortium.

Analysts were quick to draw parallels between Kashagan and Russia's dispute with Shell that led to the firm ceding control of Sakhalin-2 to Gazprom.