(SRI) - Kazakhstan's authorities accused Eni SpA, the Italian energy group, of a $110-million fraud committed while operating the giant Kashagan offshore project.
Adil Abylkasymov, a department head at Kazakhstan's financial police, said Eni was under investigation for over representing the construction cost of an oil installation.
Abylkasymov said Agip had twice calculated the same costs of construction and installation works which it later intended to offset at the expense of oil and gas to be extracted from the Kashagan deposit.
"By using this ploy, unconscientious investors upwardly distort the volume of their actual investment commitments, which means [they make] quasi-investments," Reuters quoted Abylkasymov as saying. "As a result, they do not only indulge in tax evasion, they also commit theft of state property."
Eni revealed that the Kazakh authorities had opened the investigation in 2007 in its latest annual report, but provided no additional details. The Italian company refused to comment on the latest allegations.
Cost overruns led to an earlier dispute over Kashagan between the Kazakh government and the foreign oil majors developing the field, which resulted in Eni relinquishing its role as the operator and KazMunaiGas, Kazakhstan's national oil company, doubling its stake in the project.
Commercial production at the Kashagan field is expected to begin in 2012 at a rate of about 300,000 barrels per day. Production will reach 1 million barrels a day during the second phase of development and will peak at 1.5 million barrels a day during the third phase.
Kashagan is the largest oil field discovered in the last 30 years with recoverable oil reserves are estimated at a minimum of 7-9 billion barrels and the total oil in-place at 38 billion barrels.
Kashagan is being developed by the North Caspian Operating Company consortium, which is also developing the adjoining Kairan, Aktoty and Kalamkas oil fields. The consortium includes Eni, Royal Dutch Shell Plc, ExxonMobil Corp, Total, KazMunaiGas (all with a 16.81 percent stake), ConocoPhillips (8.4 percent) and Inpex Holdings Inc (7.56 percent).
