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Tensions mire Kazakh oil potential

July 2, 2008 at 4:11 PM   |   Comments

ASTANA, Kazakhstan, July 2 (UPI) -- The strained relationship with energy-rich Kazakhstan and world oil giants overshadows the renewed international interest in the country's vast reserves.

Analysts consider Kazakhstan's Kashagan oil field in the northern Caspian Sea to be the largest outside of the Gulf region with an expected 13 billion barrels worth of recoverable oil.

The date for exploitation of this field, however, experienced delays over technical and political issues, pushing the operational deadline from 2005 to 2013, The Financial Times said Wednesday.

Kashagan could bring as much as 1.5 million barrels of crude to the market per day, but Italian energy firm Eni, which is charged with operating the field, said hydrogen sulfide and high pressure created unexpected delays in extraction.

Furthermore, a row between Kazakhstan and international oil firms over shares and pricing mechanisms resulted in a decision by the Kazakh government to revoke the Eni deal once the field comes online.

Kazakhstan moved recently to expand its pipeline capacity in lieu of the potential reserves, however, and the increased estimates regarding the natural resources in the Caspian region put Kazakhstan at the center of the new world energy market, the Times said.

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