"Work at Kashagan may be stopped completely. We are conducting an audit and already have reason to believe that the operator is not respecting Kazakh environmantal laws," Ecology Minister Nurlan Iskakov said.

ENI has faced increasing government pressure over the field, which contains seven billion to nine billion barrels of extractable crude, owing to rising project costs and production delays over the past month.

Contacted by AFP, an ENI spokesman refused to comment on the minister's warning.

"We are obliged by law to remove authorisation (for the project) given that future operations would do unjustifiable damage to the environment," Iskakov said at a meeting of government ministers.

Prime Minister Karim Masimov responded: "We are very disappointed in the way this project is being led. If the operator cannot resolve these problems, we can't rule out changing it."

Kazakhstan previously warned it could re-examine ENI's contract after the Italian energy giant delayed the start of production from 2008 to 2010 and raised its cost projection from 57 billion dollars to 136 billion dollars (100 billion euros).

Kashagan, located in the north-east of the Caspian Sea, has been billed as one of the largest oil discoveries of the past 30 years.

Partnering with Eni in the project are French energy company Total, Royal Dutch Shell, ExxonMobil, ConocoPhillips, Japan's Inpex and Kazakhstan's state-owned KazMunaiGaz.

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