Kazakhstan Pulls Tax Claim Against BG, Eni Venture on Stake
Kazakhstan withdrew a claim for back taxes against an oil venture including BG Group Plc (BG/) and Eni SpA (ENI) after agreeing to buy a 10 percent stake in the company earlier this month, according to Deputy Oil Minister Lyazzat Kiinov.
“Our taxmen raised some questions but through negotiations all the issues were taken off the table,” Kiinov said today at a Doha conference. “We reached an agreement in principle” and the partners will sign a deal by the end of this year, he said.
BG Group is still negotiating with the government, Mark Todd, a spokesman for the company, wrote in an e-mailed response to questions today. “We are on the right path to reaching a beneficial resolution for all parties but as yet we have not concluded our discussions,” he wrote, declining to elaborate.
Gianni Di Giovanni, a Rome-based spokesman for Eni, wasn’t immediately available for comment when called by Bloomberg News.
The foreign partners, led by BG and Eni, may be paid $700 million to $1.1 billion for the stake in Karachaganak Petroleum Operating BV, Timur Kulibayev, head of the Samruk-Kazyna state wealth fund, said in October. Venture partners, also including Chevron Corp. (CVX) and OAO Lukoil, must settle issues with the Oil and Gas Ministry before a deal is reached, Kulibayev said.
KazMunaiGaz National Co., a state power producer controlled by Samruk-Kazyna, would hold the government’s 10 percent stake.
Kazakhstan is seeking entry to the only major oil project in which the state doesn’t hold a stake as it increases control of the country’s resources. The government has said it will only approve a budget to expand the facility after gaining a stake.
“This will be a package deal,” Oil and Gas Minister Sauat Mynbayev said Oct. 5, a day after stating the country wouldn’t drop tax claims against the venture as part of negotiations.
Kazakhstan expects the venture to decide on a $14.5 billion third-phase expansion, KazMunaiGaz said in February. BG and Eni each hold 32.5 percent of the venture, Chevron 20 percent and Lukoil 15 percent. Karachaganak produced the equivalent of about 360,000 barrels of oil a day in 2010, the project website shows.
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