China buys stake in giant Kazakh oilfield for $5bn
September 7, 2013, 5:22 pm

Chinese President Xi Jinping announced the deal at the end of a state visit to Kazakhstan [Xinhua]

“The two countries have agreed on China’s shareholding in the development of the Kashagan deposit,” announced President Jinping.

The Kashagan oilfield is the world’s largest oil discovery in five decades.

Xi announced the deal at the end of a state visit to Kazakhstan.

Xi has sought to highlight the growing energy cooperation in China-Central Asia ties.

“The value of the deal is around $5 billion, but in addition to the sales price there are a range of conditions, namely the Chinese will finance a share in KMG for second-phase investment. Let’s say, the first part of the second phase – this is around $3 billion only on the part of KMG, the total amount is around six times more,” KMG’s Head Sauat Mynbayev said after a signing ceremony.

In a joint statement concluding official talks between the Chinese leader and his Kazakh counterpart Nursultan Nazarbayev, the two sides are targeting a trade volume of $40 billion by 2015.

Oil and gas deals, including on building an oil refinery in Kazakhstan, are among 22 agreements worth some $30 billion reached during Xi’s visit, Nazarbayev said.

“KMG now has a 16.8 per cent share in Kashagan,” Mynbaev said.

“This is half the investment KMG is obliged to finance in accordance with its share obligations. In addition, a pipe works will be built, as well as an industrial complex for oil equipment in Aktau, and some social facilities in Astana,” Mynbaev added.

The Kashagan field holds geological oil reserves of 4.8 billion tons, with 38 billion barrels of oil (10 billion recoverable), and over a trillion cubic meters of natural gas.

American oil giant ConocoPhilips previously held 8.4 per cent.

Kazakhstan’s oil and gas ministry notified ConocoPhilips in July of its intention to use its preferential rights to buy ConocoPhilips’ share in the North Caspian project.

Source: Agencies