Kazakhstan has reached a preliminary agreement in its controversial bid for part of a stake owned by British Gas (BG) in the vast Kashagan offshore oil field, the country's foreign ministry said yesterday

Kazakhstan has reached a preliminary agreement in its controversial bid for part of a stake owned by British Gas (BG) in the vast Kashagan offshore oil field, the country's foreign ministry said yesterday. Talks held in London this week on the state's bid for part of BG's 16.67 per cent stake produced "agreement in principle on participation by the Kazakh side", the foreign ministry said in a statement. The Kashagan project in the Caspian Sea is the largest and most complex of several under way in this oil-rich former Soviet republic, seen by the West as a potential alternative to traditional producers in the Middle East. The precise size of the stake Kazakhstan will gain was not published. The state's recent announcement that it wanted at least part of BG's stake in Kashagan is seen as inconvenient to the other shareholders, who had hoped to distribute the stake among themselves after the British firm announced it wanted to sell last year, informed sources have said. Kashagan is thought to be the world's fourth or fifth largest oil field, with estimated reserves of 45 billion barrels, of which between 8bn barrels and 13bn barrels are currently considered recoverable. The project has been beset by difficulties, including a delay in the start of production from 2005 until 2008, partly attributed to the unwieldiness of its seven-member ownership structure. While Italy's ENI operates the field, its stake, unusually, is equal to those of BG, TotalFinaElf, ExxonMobil and Shell - at 16.67pc - while smaller stakes are held by ConocoPhillips and Inpex.