Kazakhstan’s government said the Eni SpA-led group of oil companies developing the Kashagan field should produce 450,000 barrels of crude a day within five years or risk losing billions of dollars in compensation for costs.

Commercial production at Kashagan should reach that daily level by Oct. 1, 2013, Kazakh Energy Minister Sauat Mynbayev told reporters in Atyrau, state-run Kazinform reported on Friday.
Eni, project operator since 1997, said Thursday it plans to start production in 2012 with daily output reaching 150,000 barrels in the fourth quarter, rising to 370,000 barrels a day in 2014. The government is confident that the 2013 target of 450,000 barrels will be met and there will be no more delays, Mynbayev said.
“Our country otherwise won’t compensate the companies’ costs - tens of billions of dollars,” Mynbayev said. “The people involved in the project calculate money well and won’t let this happen.”
KazMunaiGaz National Co., Kazakhstan’s state-run oil producer, and Royal Dutch Shell Plc will create a joint venture to manage oil output at Kashagan once Eni gives up its role as sole operator following the start to production, Mynbayev said, according to a statement posted on the government Web site on Friday.
Eni and partners including Exxon Mobil Corp., Shell and Total SA have pushed back Kashagan’s start date amid cost overruns and delays. The offshore field in the Kazakh part of the Caspian Sea has about 13 billion barrels of oil equivalent recoverable reserves, according to Eni.
(Source: Bloomberg)