***Update: Just two minutes after I posted this, I see the reports popping up on Google News: “KazMunaiGas reaches deal with Kashagan partners” (Reuters). No details have been announced yet, so a proper update to this story will have to wait until tomorrow.***

The Russian news agency Interfax featured a very explosive exclusive in its news wires last Friday: “Kazakh govt ready to cancel Kashagan deal with Eni consortium” read the headline. Although not substantiated by any other source, the story highlights the tension surrounding the Kashagan consortium’s negotiations with the Kazakh government.

‘The ministry, together with KazMunaiGaz, are examining the issue and are drafting the documents necessary to dissolve the North Caspian PSA with the Agip KCO consortium,’ a source familiar with the talks told Interfax.

Shares of the Italian operator Eni dropped once the news report was picked up by other news outlets around the globe. But was the timing of the article just coincidental? A meeting that was scheduled for Friday did not take place, instead the parties met today, just two days before the deadline of January 15.

The New York Times is rightly sceptical:

[A]n abrogation of the contract seemed unlikely given that as recently as last month the president of Kazakhstan, Nursultan Nazarbayev, said his government would not cancel the deal. (…) The Interfax report emerged two days before Mr. Nazarbayev was scheduled to meet with the chief executives of the Western oil companies in Kazakhstan’s capital, Astana. Mr. Nazarbayev himself has taken a softer tone, saying the contract should be renegotiated.

A lot of rumours surfaced recently: Apparently, all consortium members bar Exxon seemed fine with giving up about 1% of their respective equity share in the massive offshore oil project. To sweeten the deal for Exxon, the US giant was offered further exploration rights in the North Caspian region. The Kazakh government would in addition receive a one-off lump sum payment totalling a few billion US-dollars.

Today, an Italian paper reported an apparently new twist to the story (via Bloomberg):

Exxon wants to take over operation of Kashagan in return for giving KazMunaiGaz a larger stake in the deposit, Italian newspaper Il Messaggero reported today, without saying where it got the information.

Today’s talks in Astana did not bring the dispute closer to a breakthrough:

Eni SpA and partners failed to reach an agreement with the Kazakhstan government over stakeholdings in the Kashagan oil field, Eni Chief Executive Officer Paolo Scaroni said, adding he doesn’t expect to return to the central Asian nation “for a long time.”

What does that mean? Will we see a change in the operator? Is the whole deal really going up in flames?

It’s all up in the air, with conflicting news reports all around. The Interfax story is so far the most dubious of them all - probably a welcome rumour in the eyes of the Kazakh government.

Big oil wants to stay onboard this massively important project. For all involved parties, Kashagan is a top-ten project in equity value. Loosing Kashagan would be nothing less than a catastrophe for the consortium members. But who else would Kazmunaigas go with if the Interfax report was really getting it right in that a dissolution of the contract is just a signature away?