THE WALL STREET JOURNAL: Kazakh Parliament Approves Amendments To Oil, Gas Laws: “Kashagan is the world's biggest oil discovery in 30 years.”: “The first meeting, held on June 30, ended inconclusively, with some partners digging in their heels against allowing the government a slice of what's believed to be the biggest oil find in 30 years.”: “But other members, possibly not wishing to jeopardize future business in oil- and gas-rich Kazakhstan, have said they won't stand in the way of the government's 11th-hour equity grab. These include Shell and Eni.” (ShellNews.net)

DOW JONES NEWSWIRES

October 20, 2004 3:59 a.m.

ALMATY, Kazakhstan -- Kazakhstan's lower house of parliament Wednesday unanimously approved several amendments in oil and gas legislation, providing the government with the right to preempt the sale of equity in existing contracts.

The amendments may be crucial for the results of the next meeting, due sometime this month,between the Kazakh government and partner companies that are developing the huge Kashagan oil field in the Caspian Sea.

Kashagan is the world's biggest oil discovery in 30 years. It is estimated to hold between 9 billion-13 billion barrels of oil, two-to-three times the U.K. North Sea's biggest ever finds.

The Kazakh government now plans to renew its efforts to preempt an agreed sale of 16.67% in Kashagan from BG Group PLC (BRG) to most of the rest of the partners.

The first meeting, held on June 30, ended inconclusively, with some partners digging in their heels against allowing the government a slice of what's believed to be the biggest oil find in 30 years.

The partners include Kashagan's operator Eni SpA (E), Royal Dutch/Shell Group (RD, SC), Total (TOT), ExxonMobil Corp. (XOM), ConocoPhillips (COP) and Japan's Inpex.

BG originally agreed to sell its stake to Chinese oil producers Sinopec (SNP), and China National Offshore Oil Corp., or CNOOC, in March 2003 for $1.23 billion. But all the other partners in the project - except for Inpex - exercised a contractual right to preempt the sale.

BG has since expressed publicly its wish to conclude the deal with other partners as agreed in early 2003. It says the government doesn't have the right to pre-empt the transaction.

But other members, possibly not wishing to jeopardize future business in oil- and gas-rich Kazakhstan, have said they won't stand in the way of the government's 11th-hour equity grab. These include Shell and Eni.

Bickering between the government and the partners, principally operator Eni, over a development plan has pushed back first production of oil from Kashagan to early 2008.

The legislative amendments now have to be approved by the senate, and then submitted for presidential approval.

-By Zaure Kistauova, Dow Jones Newswires; (+7 095 974 8055); michael.wang@dowjones.com