Nazarbayev told Chevron's Chief Executive Officer David O'Reilly that the U.S.'s second-biggest oil producer has been a ``model'' for foreign investors, according to a statement posted today on the president's Web site. Prime Minister Karim Masimov told O'Reilly he ``thinks highly'' of Chevron, the government said in a separate statement.
The show of support for the company's TengizChevroil LLP project contrasts with criticism of the Eni SpA-led Kashagan development, the world's biggest oil discovery in more than three decades. The government has threatened to shut Eni's venture after the start date was pushed back by five years and costs ballooned to $136 billion.
``Tengiz is a cash cow for the Kazakh government,'' said Rinat Gainoulline, an equity strategist at Moscow's Alfa Bank. ``It would be very dangerous to initiate a Kashagan-style dispute.''
TengizChevroil, Kazakhstan's biggest oil producer, has brought the country about $19 billion in revenue since 1993, Gainoulline said.
O'Reilly discussed Chevron's operations in Kazakhstan with Nazarbayev and Masimov today in the capital, Astana. Neither the president's nor the prime minister's statements mentioned demands by Kazakh Senator Gani Kasymov to shut down TengizChevroil.
Call to Close Down
Kasymov wants the government to close the venture because of environmental damage caused by the storage of millions of tons of sulfur at the site, his assistant, Bektimir Kazbekov, said today in a telephone interview.
Ainagul Shakirova, a spokeswoman for Masimov, said the prime minister would consider Kasymov's request.
``There is no reason for an investigation against Chevron's venture at the moment, as we have continuous cooperation with the venture,'' Shakirova said by telephone from Astana.
TengizChevroil sees ``no basis'' for stopping work at the Tengiz field, Maria Karazhigitova, an Atyrau-based spokeswoman for the venture, said today by phone. TengizChevroil has developed the project ``in strict accordance with Kazakh law,'' she said.
The venture last month rejected claims from a regional branch of the Ecology Ministry that it created ``excessive'' stockpiles of sulfur from its oil output.
$1.2 Billion Investment
In April, Chevron's Kazakh project averted the suspension of its license by agreeing to spend $866 million on environmental improvements from 2007 through 2010. The company has invested $1.2 billion in environmental projects in Kazakhstan in the last eight years.
TengizChevroil plans to nearly double oil production next year to 550,000 barrels a day, after building a $5.5 billion gas- processing plant and gas-injection system for oil extraction.
The development has brought Kazakhstan $2 billion this year and roughly $19 billion in total revenue since 1993, according to Gainoulline. That figure includes royalty payments, purchases of goods from Kazakh suppliers, railway fees and employee salaries.
O'Reilly and Masimov discussed developing oil fields in Kazakhstan, expanding a pipeline that carries oil from Kazakhstan to the Black Sea and other infrastructure projects, according to the statement from the prime minister's office.
The Kazakh parliament said in a statement Sept. 12 that it plans to amend its subsoil law to enable the government to annul contracts with oil companies and ``restore the economic interests of Kazakhstan.''
Via|Bloomberg| by Greg Walters and Nariman Gizitdinov
