Italy, Kazakhstan: Complications to an Energy Project

An Italian court in Milan will begin proceedings against Italian state-run energy giant ENI on May 29 over accusations that the company's Kazakh subsidiary Agip KCO bribed Kazakh officials in order to continue operating in Kazakhstan's massive Kashagan offshore oil field. In 2007, the firm allegedly gave $20 million to Timur Kulibayev, the country's energy czar and Kazakh President Nursultan Nazarbayev's son-in-law. ENI's CEO, Paolo Scaroni, could be charged with international corruption. The court could even prohibit ENI from participating in Kashagan's development, a project in which the company is a key consortium member.

Kashagan is one of the largest oil finds in 40 years and Astana's hope for major oil industry expansion in the future, but the project has exceeded its deadline and budget limits. ENI's potential withdrawal from the project could be a blow to the already troubled project. However, the Kazakh government is already making plans to replace ENI should the Italian government force the firm to withdraw.