Kazakhstan halted work at the huge Kashagan oilfield for at least three months on Monday, due to ecological concerns, and said it was probing customs violations there as it piled pressure on the Eni-led Western operators.
Kashagan's start-up delays have long irked Kazakhstan, which has threatened to revoke a permit held by the Eni-led group to exploit the world's biggest oil find in decades.
The Italian energy company said last week the consortium had gained 60 days to reach a negotiated solution but on Monday Ecology Minister Nurlan Iskakov announced work would cease.
"The permit for 2007 has been suspended. That is, we are suspending work for three months on our part," Iskakov said.
Separately, the Finance Ministry's customs committee said it had uncovered customs violations at the deposit concerning imports of two helicopters and was opening a criminal case against unidentified consortium officials.
"The actions by a number of officials at the AgipKCO branch contain criminal activity ... that is, evasion of significant customs payments," it said in a statement, putting total budget losses at $2.5 million.
The Committee ... has also uncovered other serious violations of Kazakh legislation in connection to the AgipKCO branch's use of the country's customs regime, including with regard to the company's subcontractors."
Adding fuel to the row, the Kazakh Emergency Ministry said it was suing Kashagan operators due to violations of fire safety rules. It said it would seek to halt construction of an oil and gas processing facility there.
An Eni spokeswoman said consortium representatives planned to meet Kazakh officials on Monday to "analyse the situation". Eni shares were down 1.05 percent at 24.60 euros at 1100 GMT.
ECHOES OF SHELL
The dispute is reminiscent of Russia's row with Royal Dutch Shell , which ended with the oil firm losing control of the giant Sakhalin-2 oil project to Russia's Gazprom after accusations of environmental infringements.
Iskakov has not specified the nature of the environmental problems but a ministry official has said it was investigating deaths among seals and harm to fish populations. Laurent Paris, an Oddo-Pinatton analyst, said the move by the Kazakh government was part of its efforts to put "maximum pressure" on the Eni-led consortium. "They are doing everything they can to renegotiate to get better terms," he said.
Kazakhstan's Energy Minister Baktykozha Izmukhambetov said in July the government was in talks to revise the share of profit oil for Kazakhstan to 40 percent from 10 percent.
But in a new twist, government sources said Prime Minister Karim Masimov would appoint a new energy minister later on Monday to replace Izmukhambetov, who has overseen the project.
Kashagan's AgipKCO consortium on the Caspian Sea also includes Shell, Exxon Mobil Corp, Total, ConocoPhillips, Japan's Inpex Holdings Inc and the Kazakh oil company KazMunaiGas.
The consortium has put off the original startup of the world's biggest oilfield discovery in 30 years to the second half of 2010 from an original target of 2005.
Serzhan Duisebayev, acting head of the customs committee, denied the latest move sought to put pressure on Eni. "We made this announcement not because we want it to be seen as part of some kind of campaign against the consortium," he said. "All investors are equal for us."
(Reuters, 27/08/2007)