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THE NEW YORK TIMES: Shell Likely to Win Kazakh Oil Exploration Rights

Shell Likely to Win Kazakh Oil Exploration Rights

Published: May 5, 2006

Filed at 4:49 a.m. ET

ALMATY (Reuters) – Royal Dutch Shell Plc (RDSa.L) is likely to win oil exploration rights to the Nursultan block in the south of the Kazakh sector of the Caspian Sea after winning political backing, the Dutch Foreign Ministry said on Friday.

“Things are looking good now and we expect the deal to go ahead,'' Herman van Gelderen, spokesman for Dutch Foreign Minister Bernard Bot, said after talks between Bot and Kazakh President Nursultan Nazarbayev on Thursday.

“But of course things still have to be finalized between Shell and its counterparts in Kazakhstan.''

A Shell spokesman in London said: “We can confirm that we've been in discussion with the Kazakh state oil company (KazMunaiGas) about the Nursultan field in the Caspian and we're pleased with progress at this stage.''

Nazarbayev's backing is crucial for major projects in Kazakhstan. He has ruled the ex-Soviet Central Asian state since 1989, overseeing rapid growth in its oil sector and economy but drawing criticism from non-governmental organizations for tolerating little political opposition and failing to root out corruption.

The Nursultan block is seen as attractive as it is in relatively deep waters near Kuryk, where there are plans to build a port.

Shell's industry-lagging record at finding oil and gas have been a major concern for investors. It said on Thursday that tight markets for oil services and supplies would make it less likely that the company would achieve its 100 percent reserve replacement target over the 2004-2008 period.

An estimate printed three years ago in Kazakhstanskaya Pravda, a state-owned newspaper, put hydrocarbon reserves at 349 million tonnes at Nursultan, citing figures from KazMunaiGas.

Shell is already a consortium member in the Eni-led (ENI.MI) giant Kashagan field in the Caspian, which is due to come onstream in 2008, and will help boost Kazakhstan into the top 10 oil producers in the next decade.

Shell's London-listed “A'' shares were 0.64 percent lower at 18.56 pounds at 0807 GMT.

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