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. Last Updated: 07/27/2016

Operator Awaits Kashagan Statement

The Kazakh government will make a statement on the future of the Eni-led Kashagan oil field Thursday, Prime Minister Karim Masimov said as a deadline for the Italian company to make a proposal to pay compensation expired.

The news came as foreign firms charged with developing the biggest oil find in over three decades hinted they would make concessions in a dispute over production delays and cost overruns.

The government suspended work at Kashagan in a shallow part of the Caspian Sea last week.

"Tomorrow I will address the Kazenergy conference and will talk about Kashagan," Masimov told reporters in Astana on Wednesday. "You can say that the prime minister will make a statement on Kashagan tomorrow."

Kazakh Deputy Finance Minister Daulet Yergozhin said Tuesday that the government was seeking more than $10 billion in compensation for the problems at Kashagan, one of the world's biggest oil finds in three decades.

Yergozhin said Wednesday that Kazakhstan expected the Eni led group to compromise in talks with the government. There has not been "any progress yet" and the government is waiting for the group to propose a plan that will allow the field to begin pumping oil "as soon as possible," Yergozhin said by telephone from Astana.

Eni has yet to comment on what it may offer.

A source familiar with the matter said the consortium, which also includes Shell, ExxonMobil, Total, ConocoPhillips and Japan's Inpex, was likely to give ground.

"The consortium will want to make some concessions," the source at a company in the group developing the field said. "But they are limited in what they can do."

Total CEO Christophe de Margerie said the firm accepted the "environment has changed" around the project and indicated he was willing to travel to Kazakhstan to help resolve the dispute.

"The priority is to resume talks with the authorities," he told analysts during a presentation in Paris on Wednesday. The Kashagan development is worth "several billion dollars" for Total, de Margerie said.

Kashagan lies at the heart of Kazakhstan's plans to join the world's top 10 oil producers and is set to double the country's crude output over the next decade.

Kazakhstan is seen by the European Union as a major source of non-OPEC, non-Russian supply. But Kashagan has been beset by problems. Production has been postponed to the second half of 2010 from 2005 originally and, according to the government, total costs have escalated from $57 billion to $136 billion.

The consortium developing Kashagan also includes Kazakh state oil and gas company KazMunaiGaz.