Kazakhstan told multinationals led by Italy's ENI they would pay the price for being too slow and spending too much to tap its vast Kashagan oilfield, saying it would secure a better deal.
"I want to warn the companies via the media that we consider changes in start-up terms as changes of the contract itself. Therefore we will respond adequately," Kazakhstan's Prime Minister Karim Masimov told a government meeting on Monday.
Kazakhstan's energy minister, Baktykozha Izmukhambetov, told the same meeting the government was in talks with the Kashagan group, led by ENI, to revise the share of "profit oil for Kazakhstan" to 40 percent from 10 percent.
He did not elaborate about changes to the terms but said the government was not happy that Kashagan's start-up had been delayed to the second half of 2010 from late 2008, a further slippage from the original 2005 target.
"According to the proposals that have been presented, costs will increase from $57 billion to $136 billion," he said without elaborating on the huge figure, which is several times bigger than ENI's latest estimates.
ENI declined immediate comment. Kashagan became the world's biggest oil find in 30 years when it was discovered last decade but its development has been delayed by technical challenges, which also prompted ENI to almost double Kashagan's first-phase costs to $19 billion.
In April, Masimov announced an audit of all energy and mineral resources contracts but said the country had no intention of seeking unilaterally to revise any existing deals. The vast Central Asian state has attracted tens of billions of dollars of foreign investment into its rapidly growing oil, gas and metals extraction industries.
In recent years it has demanded terms more in its favour to reflect lower risks of investment. While Kazakhstan is trying to row back on terms conceded when its legal and other infrastructure was less developed, Russia has been clawing back energy contracts awarded to foreign firms when it needed investment in its outdated energy sector shortly after the fall of communism.
Current high oil prices have also made resource nationalism more attractive to producing countries around the world, notably Venezuela. Kazakhstan produces about 1.3 million barrels of oil a day from two major onshore fields - Tengiz and Karachaganak - and hopes to increase production to more than 3 million bpd when Kashagan starts up.
Eni's main partners in Kashagan are Exxon Mobil Corp, France's Total and Royal Dutch Shell. ENI has trimmed forecast output for the first two tranches to 350,000 bpd from 450,000 bpd. Eni blamed two-thirds of the cost hike on the broadening scope of the project, and the rest on foreign exchange and cost inflation.
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