China National Petroleum Corp has formulated plans to purchase a stake in Kazakhstan's largest oil field. According to people with a knowledge of the matter, CNPC would pay US$5 billion for the purchase.
CNPC is set to acquire 8.33% of the Kashagan project from its current owners, KazMunaiGaz National Co, according to two of the sources who asked not to be named as the deal is still to be announced to the public. The announcement may be made as soon as next week.
KazMunaiGaz would be maintaining its shareholdings in the Kashagan oil fields. Production is projected to commence by September, through the exercise of an option to purchase 8.4% of the project from its holders, ConocoPhilips. Conoco for its part, had agreed to sell part of its shareholdings to India's Oil and Natural Gas Corp just last year. As part of its eminent domain rights as the state oil firm, KaiMunaiGaz has the right to intercede and even purchase the shares outright.
With this acquisition, China's relationship with Kazakhstan grows deeper as the projected production schedule is already eight years behind and its overall cost has doubled since then.
LI Runsheng, CNPC's spokesperson did not respond to calls to his office while both Kazakh government and KazMunaiGaz would only provide comments after a formal letter request is submitted.
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