Kazakh state oil and gas company KazMunaiGas will set up a joint venture with Royal Dutch Shell PLC (RDSA) to manage oil production at the giant Kashagan oil field in the Caspian Sea, the Kazakh Energy Minister has said according to a statement on the government Web site Friday.
Sauat Mynbayev said late Thursday that KazMunaiGas's joint venture with Shell would manage Kashagan oil production in five year's time, the government statement said.
Mynbayev said that KazMunaiGas representatives would take on leading roles running oil production at Kazakhstan's largest oil field that it is expected to start commercial production by the end of 2013.
KazMunaiGas doubled its stake in the Kashagan project to 16.8% as part of the resolution of a dispute between the Kashagan consortium and the Kazakh government over rising costs and repeated delays to the start of production which was initially set for 2005.
In a separate report, the state-owned news agency Kazinform quoted Mynbayev as saying that Kashagan oil production must stand at 450,000 barrels a day by October 2013, otherwise the Kazakh government won't compensate the consortium "for its costs of billions of dollars."
Members of the consortium are KazMunaiGas, Eni SpA (E), Total SA (TOT), Exxon Mobil Corp. (XOM), Shell, ConocoPhillips (COP) and Japan's Inpex Holdings Inc. (1605.TO). Eni leads the consortium.