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Kazakh police to probe Chevron-led oil venture

by Raushan Nurshayeva | Thomson Reuters Foundation
Thursday, 8 July 2010 09:30 GMT

* Financial police to examine Tengizchevroil

* Suspects venture earned $1.4 billion in extra oil

* Tengizchevroil, Chevron unavailable for comment

(Adds details, quotes, background)

ASTANA, July 8 (Reuters) - Kazakh authorities suspect an oil venture led by U.S. major Chevron of extracting $1.4 billion worth of oil above the level agreed with the government, a spokesman for the country's financial police said on Thursday. Murat Zhumanbai, spokesman for the Agency for Fighting Corruption and Economic Crime -- Kazakhstan's financial police -- said the suspicions related to alleged production by the Tengizchevroil venture. No criminal case has been launched.

"The Kazakh Agency for Fighting Corruption and Economic Crime has received materials from the general prosecutor on the inspection of Tengizchevroil's activities and illegal production of oil worth 212 billion tenge ($1.4 billion)," Zhumanbai said.

"The materials have been registered according to the law and a decision will be taken in due course, after an investigation."

A spokeswoman for Chevron in Moscow referred questions to a Tengizchevroil official in Kazakhstan. Two officials for the joint venture were not immediately reachable for comment either by telephone or email.

Chevron in the United States was not immediately available for comment.

Chevron owns 50 percent of the Tengizchevroil venture. Another U.S. major, ExxonMobil, holds 25 percent and Kazakh state oil and gas firm KazMunaiGas 20 percent. The other shareholder is Russia's LUKOIL.

Kazakhstan, Central Asia's largest economy and oil producer, has attracted more than $100 billion in foreign investment since gaining independence two decades ago. Much of this has been channelled into the natural resources sector.

In recent years, Western energy firms have come under increasing pressure from the state as government firms look to raise their influence in the sector.

State acquisitions have often followed campaigns in which the government has accused companies of environmental or tax violations, or of breaking the terms of their contracts.

Oil and Gas Minister Sauat Mynbayev said on June 21 that he suspected the Tengizchevroil venture had produced "significant volumes" of crude above the levels specified by its licence agreement.

In March, the financial police accused the Karachaganak gas project of illegally earning $708 million in 2008 by producing more oil and gas than originally agreed.

KazMunaiGas subsequently approached the consortium which owns the project, led by BG and Eni, with a proposal to acquire 10 percent in the project. (Additional reporting by Jessica Bachman in Moscow and Matt Daily in New York, writing by Robin Paxton, editing by Anthony Barker)

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