UPI Energy Watch

Kazakh-Eni talks on Kashagan continue

Kazakhstan and an Eni-led consortium will continue talks on the Kashagan field until Jan. 15, Kazakh Energy Minister Sauat Mynbayev said Monday.

"The talks are not yet over, they will continue until Jan. 15," he said.

The comments were reported by RIA Novosti.

Talks follow the Kazakh government's decision in August to suspend for three months -- citing environmental concerns -- Eni's license to develop Kashagan; the Italian company, which operates the field, had said commercial production would begin in late 2010 instead of late 2008, and costs would more than double from $57 billion to $136 billion.

Eni, Royal Dutch Shell, Exxon Mobil and Total each hold 18.5 percent in the project. ConocoPhillips has 9.3 percent and Japan's Inpex and Kazakhstan's state-run KazMunaiGas 8.3 percent each.

Astana wants to increase KazMunaiGas' share in the project and earlier this month reached deals with members of the consortium -- all except Exxon -- under which the companies would transfer parts of their stakes to KazMunaiGas, according to RIA Novosti.

Talks are expected to be completed by Dec. 20, the news agency said.

Kashagan is believed to have recoverable reserves of 7 billion to 9 billion barrels of oil.

Iraq to S. Korea: Halt oil work in KRG or face consequences

Iraq's government warned South Korea's SK Energy Co. to stop work in Kurdistan or face a cutoff of oil supplies, South Korea's Yonhap News Agency reported Monday.

The warning came by phone and said SK did not seek Baghdad's permission to work in Iraqi Kurdistan, state-run Korea National Oil Corp. said, according to Yonhap.

SK Energy is part of a KNOC-led South Korean consortium that signed an output-sharing deal with the Kurdistan Regional Government, Yonhap said. The deal is for a 38 percent stake in the Bazian oil field, which is estimated to hold 500 million barrels of crude oil.

Yonhap reported that the South Korean government is reviewing Baghdad's demand.

Chavez proposes oil-for-goods deal

Venezuelan President Hugo Chavez has proposed a deal under which poor Caribbean countries can use their products to pay for oil from the world's No. 5 oil exporter.

The proposal, which came Friday at the fourth summit of the Petrocaribe initiative in Cuba, is similar to a deal Venezuela has with Havana under which Cuba gets cheap oil and in return sends Venezuela hundreds of its doctors. The move is another attempt by Chavez to reduce the region's dependence on the United States, his No. 1 energy customer.

At the meeting, Chavez also called for more refineries to be built in the region so Venezuela could process its crude there instead of facilities in the United States.

Chavez accuses the United States of interfering in the region's affairs. Washington says Chavez has stifled freedom in his country and is using high oil prices to bolster his own position at the expense of the country's oil and state-owned PDVSA.

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Closing oil prices, Dec. 24, 3 p.m. London

Brent crude oil: $91.85

West Texas Intermediate crude oil: $91.82

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(e-mail: energy@upi.com)