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Hellfire Economics/ Multinational companies and the contract dispute over Kashagan, the world’s largest undeveloped oilfield

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Hellfire Economics/ Multinational companies and the contract dispute over Kashagan, the world’s largest undeveloped oilfield



Publisher: CEE Bankwatch Network

Date: December, 2007

Volume: 32 pages, pdf

Description

Oil executive Richard Matzke could easily have been talking about the economics of developing the Kashagan oilfield rather than the geology. It seems that as the government of Kazakhstan has drilled down into those economics, it has found a dangerousmess. This briefing paper aims to explore the mess it found. In summer 2007, the Government of Kazakhstan announced that it wanted a better deal from development of Kashagan, the world’s largest undeveloped deposit. The field is being developed under a 40-year contract, signed in 1997 with a consortiumof oil companies now led by Italy’s Eni. Located in the shallow waters of the northern Caspian Sea, the field is one of the world’smost technically complex, containing large quantities of sulphur, for which no safe disposal or storage solution has yet been found. Sulphur can become toxic in certain conditions found in Kazakhstan (such as high temperatures), posing a serious threat to local communities and to wildlife. It is also amajor cause of acid rain.