By Guy Dinmore

in Rome

Italy’s Eni group and Kazakhstan’s London-listed KazMunaiGas on Thursday signed a preliminary agreement that could result in up to $50bn of investments in the central Asian state’s upstream and downstream oil and gas sectors.

Separately Paolo Scaroni, Eni’s chief executive, confirmed he had recently visited Turkmenistan where Eni has been labouring under a two-year visa ban for its employees following its purchase of Burren Energy of the UK, which operates an onshore Turkmen oil field.

Analysts said that while the memorandum of understanding signed in Rome was non-binding, it reflected Eni’s growing ambitions in the region and Kazakhstan’s intention to move away from being just an exporter of raw materials and to lessen its dependence on Russia. Cash-strapped Eni, which slashed its interim dividend this year, is in no position to fund the ambitious projects itself.

Scaroni said that agreements with future investors would be made within 12 to 18 months, and could include its present partners in Kazakhstan, namely Chevron, Lukoil, BG Group, Total and the Kazakh government.

“There is potential for very large investments of $40bn to $50bn,” Scaroni said. The Rome MOU was signed in the presence of Silvio Berlusconi, Italian prime minister, and Nursultan Nazarbayev, Kazakhstan’s president.

The four-part agreement includes construction of a gas sweetening plant in Kazakhstan.

Kazakhstan at present has to send all its sulphur-rich gas to Russia for processing before some is piped back for internal consumption. Eni is a co-operator with BG of the UK in the Karachaganak oil and gas field.

The MOU also foresees upgrading Kazakhstan’s Soviet-era Pavlodar refinery, construction of a shipyard on the Caspian, and joint Eni-KazMunaiGas exploration of the Isatay and Shagala oil blocks in the Caspian.

Analysts said upgrading the Pavlodar oil refinery, which would continue to import Russian oil from Siberia, would be an important development to reduce Kazakhstan’s large imports of aviation fuel and lubricants.

But they questioned the viability of a petro-chemicals industry far from potential markets.

Julia Nanay, senior director of PFC Energy consultants, said: “Eni feels confident that Kazakhstan is an important area for their future growth. They have good relationships.” Scaroni indicated he had made progress in Turkmenistan when he met President Gurbanguly Berdimuhamedov.

Analysts said this could set a useful precedent for other western companies seeking to exploit Turkmenistan’s onshore oil.