(SRI) - The Karachaganak Petroleum Operating (KPO) joint venture is facing claims of at least $2.5 billion by the Kazakh government, Bloomberg reported on Friday citing sources with knowledge of the matter.
Kazakhstan has put pressure on KPO amid claims that the government seeks to acquire a stake in the project. Since last year, local authorities slapped the venture with tax and environmental claims, accused it of "illegal earnings" and deported several expat workers accused of violating Kazakh immigration laws.
The dispute is reminiscent of changes at the Kashagan project which resulted in the national oil company KazMunaiGas doubling its stake in the field after the government accused the Western-led venture of delays and cost overruns.
Karachaganak, meanwhile, is the only major oil and gas project in Kazakhstan, which is being developed without the participation of KazMunaiGas. According to analysts, Kazakhstan is using pressure tactics to force its way into the project and increase its revenue share.
Sale negotiations
The Kazakh government is also in talks with KPO about having the venture pay taxes under current tax legislation, rather than under its Production Sharing Agreement (PSA), which stipulates a fixed tax regime, Kazakh Oil and Gas Minister Sauat Mynbayev told Russian RIA Novosti news agency.
Kazakh officials, including President Nursultan Nazarbayev, occasionally called for the abolition of the PSAs in the past, citing changing conditions in the industry. Until now, however, the government has refrained from taking this step, fearing backlash from international investors.
Kazakh and KPO officials have denied leading direct talks about a possible sale of a stake in the venture to KazMunaiGas. Last week, however, Italy's Il Sole 24 Ore business daily reported that negotiations have already started in London.
KPO is a joint venture held by U.K.-based BG Group, Italian Eni, both of which hold a 32.5-percent stake, U.S. Chevron, which owns 20 percent, and Russian LUKOil, which has the remaining 15 percent.
