Firms seal US$2.6b oil pact | Shanghai Daily

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November 26, 2009

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Firms seal US$2.6b oil pact

CHINA National Petroleum Corp has finalized a US$2.6 billion deal with Kazakhstan's state energy company to jointly buy the Central Asian country's fourth-largest oil producer, Kazakhstan's KazMunaiGas said in a statement yesterday.

The companies bought MangistauMunaiGas, which controls oil reserves estimated at around 500 million barrels, through an investment venture owned by KazMunaiGas and CNPC with funds largely provided by state-owned Export-Import Bank of China.

CNPC's acquisition accounts for 50 percent in the Kazakh-based company. MangistauMunaiGas produces 110,000 barrels of oil daily.

The purchase of MangistauMunaiGas from British Virgin Islands-registered Central Asia Petroleum Ltd was due for completion in July, but was reportedly delayed due to issues relating to the oil company's outstanding tax liabilities.

CNPC and KazMunaiGas initially agreed the joint purchase of MangistauMunaiGas as part of larger deal for China to lend Kazakhstan US$10 billion.

China is undertaking a long-term project to bolster its energy security by sealing deals with neighboring nations and reduce its reliance on maritime oil transport routes.

Earlier this year, China's sovereign wealth fund announced that it had paid US$949 million for an 11 percent stake in KazMunaiGas subsidiary, JSC KazMunaiGas Exploration Production.

In February, China signed a long-term oil supply contract and pipeline deal with Russia worth US$25 billion. Days later, Brazil agreed to supply up to 100 million barrels of crude oil a day to China in exchange for a loan of up to US$10 billion.

That same month, Venezuela and China struck a deal to put an extra US$6 billion into a fund used to finance joint development projects in areas including oil production.

CNPC has been operating in Kazakhstan for several years and is the largest Chinese energy company.

It bought Canadian-managed oil producer PetroKazakhstan for US$4.18 billion in 2005, the largest foreign purchase by a Chinese company at the time.

Kazakhstan is eager to diversify its oil export routes, most of which currently go to Western buyers across Russian territory.




 

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