Even as ConocoPhilips clears the deck for sale of its 8.4 percent stake in Kazakhstan oil field Kashagan to India's oil & gas major ONGC Videsh for a total consideration of about $5 billion, some of ConocoPhillips' partners in the oilfield project could still exercise their right of first refusal on the stake.
Currently, the first right of refusal rests with Kazakhstan state-run KazMunaiGas, Italy's Eni, ExxonMobil, Inpex Corp of Japan, Royal Dutch Shell and France's Total.
Kazakhstan state itself has been planning to acquire the stake to increase its share in the project. A state-appointed commission will review the deal and suggest the likely way forward. KazMunaiGas Chief Executive Lyazzat Kiinov had stated some time ago that the state company would consider possibilities of acquiring the stake. In a similar vein, Kazakhstan Oil and Gas Minister Sauat Mynbayev was quoted saying the state would appoint a commission to review major deals. The review of the Kashagan deal is likely to take up to two months.
Reports indicate that Shell and Exxon are not inclined to exercise their right of first refusal, whereas Inpex has not made any statement in this regard.
Meanwhile, ONGC Videsh Managing Director D K Sarraf has been quoted saying that he expects the Kazakhstan government to take up to six months to approve the deal after the expiry of a 60-day period for partners to exercise their pre-emption rights.
ConocoPhilips is looking to offload its stake primarily because the oilfield project, which is the biggest oilfield discovery across geographies in over four decades, is mired in cost and time overruns. The oilfield holds an estimated 30 billion barrels of oil-in-place, of which 8-12 billion are potentially recoverable. First production is expected next year. ConocoPhillips is already shedding its overseas assets to cut debt and increase its investment in lower-cost domestic shale oil and gas.
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