Astana (AsiaNews/Agencies) – The renegotiation of a deal covering the development of the Kashagan oil field in Kazakhstan indicates that the balance of power in the Caspian Basin energy game is tipping in favour of Kazakh authorities but also US oil giant ExxonMobil, which has replaced Eni SpA as the top partner in the foreign-dominated consortium.

“Now the balance of justice has been restored,” Kazakh President Nursultan Nazarbayev said on Khabar TV.

“Great Oil Victory,” headlined the Megapolis newspaper. “KazMunayGaz and the government have shown who is boss,” the article read.

Kashagan oil field, the largest potential oil reserve found in 35 years, was discovered in 2000 in the northern Caspian Sea. It has an estimated 13 billion barrels of recoverable reserves and could produce up to a million barrels a day.

The original deal signed in 1997 between the Kazakh government and a consortium which included ExxonMobil, Royal Dutch Shell, Eni (leader of the consortium since 2001), Total, ConocoPhillips, Japan’s Inpex and Kazakh state-owned KazMunayGaz or KMG would give the former 2 per cent share in profits or about US$ 120 million per year over ten years.

However, getting the oil field up and running has proven more difficult. Last year the consortium announced that the start-up date would slip to 2010 and that development costs would reach US$ 136 billion, more than double the original estimate.

The Kazakh government snapped at the over-runs and delays, fretting over their potential effects on the local economy and its desire to make Kazakhstan one of the world’s top 10 energy producers.

In August 2007 it reopened the deal to get a greater stake for KMG and compensation for lost benefits. But the going was tough, partly because of strong opposition by US-based Exxon.

A deal was struck 13 January with a memorandum of understanding whereby the consortium agreed to pay Kazakhstan US$ 2.5-4.5 billion in compensation for the project’s late start and to increase KMG’s stake in the consortium from 8.33 per cent to 16.81 per cent (Eni, Exxon, Shell and Total cut their share from 18.52 per cent to 16.81). Under the terms of the deal, KMG would pay US$ 1.78 billion for the shares it is buying, a price tag estimated to be about half their fair market value.

In renegotiating the deal Kazakhstan has shown that whilst it may need foreign investments and technology to develop its resources it can get its way.

Negotiations were complex, especially because of the tough line taken by Exxon compared to the other members of the consortium who were willing to accept a previous proposal.

Under the new deal Eni loses its leading role in the consortium (which it held since 2001) which is now shared between the main partners (ExxonMobile, Total and Shell).

For analysts the negotiations also showed how the US Company was able to assert its ascendancy in the partnership.