Kazakhstan has lowered the stake it is willing to give to ONGC Videsh-Mittal Energy (OMEL), in the two-billion barrel Satpayev oil block."Kazakhstan has changed the terms of offer for the Satpayev block in the Caspian Sea. Instead of 50% stake and operatorship, it is now offering only 25% stake to OMEL," a source close to the development said.In 2005, Kazakhstan had offered ONGC Videsh (OVL) 50% stake and operatorship in either Satpayev or Makambet blocks. In October 2006, it wanted Mittal, who has a large steel plant in Kazakhstan, to be included and so OMEL was drafted-in instead of OVL.Now, Kazakhstan has reduced the offer to 25% stake and has given the operatorship and majority stake in Satpayev block, which was selected by OMEL for participation, to its national oil company KazMunaiGaz (KMG).OMEL, however, is insisting on operatorship and 50% stake in the Satpayev block, the source said.Besides the delay in allotment of the block, KMG has also demanded an additional bonus besides the signature bonus (the money paid to the government on allotment of a block) of about $100 million. The source said KMG also wants OMEL to carry its interest in the block."If agreed, OMEL will have to pay KMG's share of expenditure during exploration phase." Satpayev is an exploration block and no commercial discovery has been established as yet. OMEL will lose all the expenditure incurred on exploration if no discovery is made.
