KAZAKHSTAN - Feb. 2 - BP Sells Kashagan Stake To TotalFinaElf.

BP Amoco has agreed to sell to TotalFinaElf its 9.5% stake in the Caspian Sea's Kashagan oilfield, thought to be one of the most significant recent finds. BP says it is quitting Kashagan because it stood no chance of being selected as sole project operator from the nine members of the Offshore Kazakhstan International Operating Company (OKIOC). The French group has offered to pay BP $400m in assets and cash. (The price compares well with values that analysts have attached to the individual 14.3% stakes held by the five biggest OKIOC partners, which have ranged between $90m and $800m during the past year. The fluctuating valuations reflect uncertainties in estimating the extent of Kashagan's assets. An enormous geological structure in the north Caspian, it measures 75 km in length and 35 km at its widest point. One estimate is that it holds up to 40 bn barrels of oil, but under such "tight" rock only 20% might be recoverable. A high level of hydrogen sulphide, a poisonous gas, in the oil reservoir also raises the project's risks). BP says Kashagan is "still in its infancy", and would take years to turn a profit. A first test-well in 2000 was hailed a success and a second is being drilled, with four more planned. BP took a smaller stake than the 14.3% shares held by TotalFinaElf, ExxonMobil, Shell, BG and Agip. It entered Kashagan as part of its now-defunct strategic alliance with Statoil of Norway. (Other OKIOC partners have pre-emption rights on equity changes in the consortium, allowing them to make counter-bids for at least some of BP's stake. But the deal would appear to put TotalFinaElf ahead in the contest to be chosen as Kashagan project operator. The Kazakhstan government has been pressing OKIOC for an early decision. Although the consortium has yet to determine the commerciality of the project, governments are lining up for the right to transport its output).