Kazakhstan reportedly weighing penalty on BG/Eni JV

Kazakhstan’s government is reportedly considering imposing a penalty on a joint venture led by BG Group and Eni that operates the nation’s second-biggest producing oil and gas field as the state looks for extra revenue to boost its finances.

Bloomberg cited people familiar with the matter as saying that the fine on the Karachaganak project could be as much as $2bn. That would be roughly in line with penalties the government threatened to impose in a 2010 dispute that ended with the state taking a 10 percent stake in the project.

Kazakhstan is looking into the possibility of imposing the fine because the companies haven’t fulfilled certain contractual obligations, sources told Bloomberg. The penalty may be a precursor to the government again increasing its stake in Karachaganak, they said.

Kazakhstan needs additional funds to balance its budget after the collapse in crude oil reduced state revenue and weakened the currency by about 45% against the dollar since the beginning of last year.

The government of President Nursultan Nazarbayev has in the past forced its oil company KazMunaiGaz into projects to increase state control over operations.

At 1116 GMT, BG shares were down 1.8% at 1,032p and Eni was 2% weaker at €14.99.