ASTANA, Kazakhstan (Dow Jones)--Kazakh President Nursultan Nazarbayev Friday said his country wants compensation or an increased stake in the Eni SpA-led (E) consortium that is developing the giant Kashagan oil field, as a way to resolve the dispute over rising costs and delays in production.
However, the Kazakh government doesn't intend to walk away from the contract with the consortium or change the operator, Nazarbayev told reporters after meeting with major foreign investors, including senior executives of some consortium members, in the Kazakh capital Astana.
"This is not about abandoning the contract," Nazarbayev said. "Both sides are looking for opportunities to resolve this question. They could be different: either the compensation we demand or increasing Kazakhstan's stake in Kashagan."
"Everything is going normally so far," Nazarbayev said. "Most members of the consortium have agreed to our proposals. With the others (that disagree) we keep working so that there's peaceful resolution for all."
Nazarbayev didn't disclose the amount of compensation his country is seeking from the consortium in which Kazakh state oil and gas company KazMunaiGas, or KMG, is also a member.
The Kazakh government has been in dispute with the Kashagan operator over rising costs, which have reached $136 billion from forecasts of $57 billion and have pushed the already delayed production startup to 2010 from 2008.
KMG said Sunday that all but one member of the consortium agreed to reduce their stakes in Kashagan to increase its share and involvement in Kashagan.
U.S. energy company ExxonMobil Corp.(XOM) was the only company resisting such plans to resolve the dispute, Kazakh Energy Minister Sauat Mynbayev was quoted in news reports as saying earlier this week. ExxonMobil has so far declined to comment on the talks.
Nazarbayev said that the Kazakh government was trying to defend the energy-rich Central Asian nation's interests in the dispute over Kashagan.
Dec. 20 is set as the new deadline for the talks to end the conflict, KMG said.
Eni, Kashagan's operator and Italy's biggest oil and natural gas company by volume, holds an 18.5% stake in the development consortium, the same as ExxonMobil Corp., Royal Dutch Shell PLC (RDSB.LN) and Total SA (TOT). ConocoPhillips (COP) holds 9.3%, while Japan's Inpex (1605.TO) and KMG each own 8.3% at present.
The Kashagan field, the biggest oil discovery in 30 years when it was found, is estimated to have recoverable reserves of about 13 billion barrels.