Everything about the Kashagan project is epic in scale: the size of the field, the toxicity of the oil, the complexity of the renegotiation of the contract. Now the terms of the original deal secured by the oil companies can be added to that list.

It has emerged that, for the first 10 years after the field was expected to start production, Kazakhstan was to have received only about 2 per cent of the oil revenues.

After that, once the project’s capital costs had been paid off, the government’s income would have risen steeply. But much of the risk in the contract remained with Kazakhstan.

Given those terms, it is unsurprising that the government has put pressure on the consortium to renegotiate the deal.

The production-sharing agreement for the north Caspian Sea, the area that includes Kashagan, was signed in 1997, with a group of companies including BG Group, BP, Total, Royal Dutch Shell and Eni. The details have been kept out of the public domain, but a copy was obtained by Platform, a campaign group that monitors oil companies.

Greg Muttitt of Platform said: “The contract was signed at a time when the government of Kazakhstan was extremely weak. The oil companies took advantage of that weakness to lock in contract terms that would last for 40 years.”

The companies argue that the generous terms they received, although agreed before the Kashagan field was discovered in 2000, were only a fair reflection of the challenges the project presented.

The field is in shallow water, requiring every vessel working on it to be specially designed with a shallow draught; and bitterly cold winter weather puts great strain on the facilities.

The oil also has a hydrogen sulphide content of up to 18 per cent, a level the industry has never faced before, and it is under very high pressure, forcing General Electric, one of the project’s contractors, to invent special equipment to handle it.

Those challenges are daunting. But because the companies were allowed to recover most of their costs from the project’s revenues, most of the risk was being borne by the government.

As work started on Kashagan, costs for oil and gas projects around the world began to rise, in some cases doubling or tripling from their original estimates.

Eni, the project’s operator, has also admitted to a very costly mistake.

The facilities are being sited on artificial islands, and the design of the development had to be reconfigured after it emerged that the staff accommodation was being sited too close to the plant for extracting the toxic hydrogen sulphide from the oil.

Rectifying that one mistake cost perhaps $2bn, and delayed the project by up to 18 months.

As the costs rose, and the planned start date was put back, the returns to Kazakhstan, never lavish, dwindled away even further.

Earlier this year, the consortium raised its estimate of the capital costs of phase one of the project from $10bn to $19bn, and put back the planned date for first oil from 2008 to 2010.

Kazakhstan revealed that the estimated total 40-year cost, including both capital and operating expenditure, had risen from $57bn to $136bn. Askar Balzhanov, the chief executive of KazMunaigas’s London-listed arm, told the Financial Times recently that under the terms of the 1997 contract, the rise in costs would have meant that Kazakhstan would not have received a dividend for 25 years.

Meanwhile, the rate of return to the companies, assuming an oil price of $60 a barrel, was estimated by Deutsche Bank over the summer at a very healthy 18.5 per cent.

In those circumstances, and set in the context of countries such as Russia and Venezuela setting an example of how to exert influence to win more favourable terms from international oil companies, renegotiation was inevitable.

The companies can only agree that a deal that seemed fair in 1997 does not seem acceptable 10 years on.

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