Kashagan execs meet in Kazakhstan to advance plan

By Maria Golovnina

ALMATY, May 8 (Reuters) - Executives from a Western oil consortium developing the Kashagan field sat down for talks with Kazakh officials on Thursday to push on with the project's new development plan, said a source close to the talks.

The consortium, which unites Italy's Eni (ENI.MI: Quote, Profile, Research), Exxon Mobil (XOM.N: Quote, Profile, Research), Royal Dutch Shell (RDSa.L: Quote, Profile, Research) and other majors, is due to submit its proposals on the future of the world's biggest oil find in three decades by the end of this month.

The source told Reuters consortium members and Kazakh officials met in the capital Astana to discuss details of a deal reached in January that ended months of tense negotiations over cost overruns and production delays at Kashagan.

The source said vice-presidents of consortium companies were holding closed-door talks with senior officials from the Kazakh energy ministry and national oil company KazMunaiGas [KMG.UL].

The January deal, while calming investor confidence shaken after six months of squabbling between Kazakhstan and the oil majors, will be enforced only after the sides agree on the precise production and structural details of the project.

Under that deal, KazMunaiGas would double its stake in Kashagan and strip Eni of its leading role in the project, whose production start has been further delayed to the end of 2011.

Industry sources have said the deadline for the proposals, set at May 31, may be pushed further if either of the sides requires more time to finalise details, particularly the start of production and the structure of its new managing company.

The stand-off over Kashagan started in August when the Kazakh government accused its shareholders of allowing costs to spiral to $136 billion from $57 billion, and delaying the start of production from the original 2005 target.