Kazakhstan reassures Italy over Kashagan oilfield

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ASTANA, Oct 8 (Reuters) Kazakhstan reassured Italy today it had no plans to change the terms of a contract signed between Italy's Eni and the Central Asian state's government to develop the giant Kashagan oilfield.

Angered by spiralling costs and production delays at one of the world's most costly oilfields, Kazakhstan has threatened to strip Eni of its leading role at Kashagan in a case that has alarmed foreign investors.

''We are not talking about revising the contract signed 10 years ago,'' Kazakh President Nursultan Nazarbayev said after talks with visiting Italian Prime Minister Romano Prodi.

''I am convinced that Eni understands goals set by the Kazakh sides and will be on our side. ... These are commercial negotiations which have nothing to do with the Kazakh president or the Italian prime minister.'' Prodi called Kazakhstan's attitude positive but said he was concerned about new legislative amendments that allow the Kazakh government to cancel or change contracts with companies if it sees a threat to national security.

Kazakhstan has softened its stance in the row since late August, when the government accused the Italian-led consortium of violating environmental legislation at the oilfield.

Eni's CEO Paolo Scaroni said, however, that the consortium may consider increasing Kazakh national oil company KazMunaiGas's 8.3 per cent stake in the project.

''There is a desire on the Kazakhs' part for a bigger involvement that will get an answer from the overall organisation,'' he told reporters after Nazarbayev-Prodi talks.

Kazakhstan wants to see KazMunaiGas become co-operator of the oilfield, where the start-up date has been put off to 2010 from the original target of 2005. Kashagan's development costs have escalated to 6 billion from billion.

OIL Other members of the Kashagan consortium -- at the heart of Kazakhstan's ambitious oil production plans -- are Royal Dutch Shell, Exxon Mobil Corp, Total, ConocoPhillips and Japan's Inpex.

Prodi and Nazarbayev, addressing reporters in the Kazakh capital Astana, did not say what form of agreement was being discussed.

Kazakhstan has said it expects to see billions of dollars in compensation from Eni for production delays.

Prodi said Nazarbayev had ''pointed out the long and complicated negotiating steps and Kazakhstan's conditions'' but called Kazakhstan's overall attitude positive.

''I certainly cannot say when the talks will be concluded because the technicians are working on them. The attitude of the president is extremely positive and can be instrumental in reaching an accord in the future,'' Prodi said.

Speaking later about the legislative amendments, which have been passed by Kazakhstan's parliament but have yet to be signed into law by Nazarbayev, Prodi said ''the business world, not just in Italy but in general, is worried'' about the law.

The proposed law was not in line with standards at the World Trade Organisation, which Kazakhstan is seeking to join.

But he added: ''I am happy about the reassuring message that has arrived not only from the president but from the prime minister that Kazakhstan has no intention of changing its policy of openness to foreign companies and that it will fully respect international rules.'' Nazarbayev said his government had the right to get tough on any investor breaking local laws: ''If investors violate contracts the Kazakh side reserves the right to take measures in accordance with our country's legislation.'' REUTERS PD BD2005

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