Source AP ©

Italian Romano Prodi holds talks with Kazakhstan leaders

Romano Prodi met with top officials in Kazakhstan Monday on a visit that comes amid a dispute between the oil-rich Central Asian nation and an international consortium led by Italy's Eni SpA.

The Kazakh government wants to renegotiate with the consortium the terms of the development of the massive Kashagan oil field in the northern Caspian Sea over delays in commercial production and cost overruns.

Italian Prime Minister, who is on his first trip to Kazakhstan, is expected to try to soften the ex-Soviet republic's stance in the dispute during his talks with President Nursultan Nazarbayev and Prime Minister Karim Masimov.

Kazakhstan's government in August suspended operations at Kashagan and warned that the state-run energy company Kazmunaigas could increase its role in the project. Kazmunaigas now has a stake of just over 8 percent in the project.

The Kashagan project is now scheduled to start commercial production in 2010, delayed from an original 2005 date. Kazakh officials also say Kashagan's total costs have jumped to US$136 billion (EUR96 billion) from an initial estimate of US$57 billion (EUR40 billion).

The development of the Kashagan field is at the core of Kazakhstan's strategic plan to triple its oil output by 2015 and become one of the world's top oil producers.

Eni estimates Kashagan, one of biggest oil discoveries of the past 30 years, will produce 1.5 million barrels of oil a day at its peak output.

The Eni-led consortium also includes U.S.-based Exxon Mobil Corp. and ConocoPhillips, Royal Dutch Shell PLC, France's Total SA and Japan's Inpex Corp.

Last month, Kazakhstan's parliament passed a bill allowing the government to review contracts with foreign companies on the development of subsurface resources if they are deemed damaging to the country's strategic economic interests. The bill will become law after it is signed by Nazarbayev.

The past few years, Kazakhstan - a vast country lying south of Russia and west of China - has been trying to increase state assets in its energy sector, which is currently dominated by Western investors.

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