Delays put Agip role in Kashagan in doubt

ASTANA, Kazakhstan, Aug. 1 (UPI) -- Kazakhstan has accused Agip of breaching an agreement on production at the Kashagan oil field, putting the future of the deal in question.

"The investor was supposed to start large-scale oil drilling in the second half of 2008," said Baktykozha Izmukhambetov, the energy and mineral resources minister. "The amount of expenses in the project has increased from $57 billion to $136 billion due to such delays as well as additional problems that have emerged."

Agip Kazakhstan North Caspian Operating Company -- owned by Italy's ENI -- is the sole operator of the North Caspian Sea Production Sharing Agreement.

Agip says oil extraction at Kashagan will start in 2010.

"A contract should be adhered to by both sides since changes to the timescale of the agreement mean changes to the agreement itself, while we adhere to agreements that we conclude," said Kazakh Prime Minister Karim Masimov.

A decision on Agip's future in Kashagan may be decided by the end of the month, Kazakh media said.