China buys stake in huge Kazakhstan oil field | Asia| An in-depth look at news from across the continent | DW | 07.09.2013
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China buys stake in huge Kazakhstan oil field

China has bought a stake in the huge Kashagan oil project in neighboring Kazakhstan. The costliest oil project in the world is part-owned by four other major oil companies.

During a trip to Kazakhstan, Chinese President Xi Jinping announced a total of 22 agreements worth some $30 billion (22.7 billion euros).

The major deal is for Kazakhstan to sell 8.33 percent of the offshore Kashagan oil field in the Caspian Sea to China for about $5 billion.

The sale and purchase agreement was signed by the heads of Kazakh state oil and gas company KazMunaiGas and China National Petroleum Corp (CNPC) in the presence of Xi and Kazakh President Nursultan Nazarbayev on Saturday.

"The two countries have agreed on China's shareholding in the development of the Kashagan deposit," Xi told a news briefing after talks with Nazarbayev. "The two governments hail and support this agreement."

Oil and gas deals, including the building of an oil refinery in Kazakhstan, are among the 22 agreements. The CNPC will also pay up to $3 billion to cover half of Kazakhstan's financing of the second phase of Kashagan's development.

Kashagan and neighboring fields in the North Caspian hold estimated reserves of 35 billion barrels of oil, with between 9 billion and 13 billion barrels recoverable. Kazakhstan, which borders both China and Russia, was once firmly under Soviet Russian control.

A multinational consortium developing the Kashagan field includes Italy's ENI, US major ExxonMobil, Royal Dutch Shell and France's Total who each hold 16.81 percent stakes in Kashagan. Japan's Inpex owns 7.56 percent. The consortium has invested some $50 billion in about 13 years, making it the costliest oil project in the world.

The opportunity to make the deal came after US oil giant ConocoPhillips put its 8.4-percent stake in the field up for sale as part of a planned reduction in its worldwide assets. The company announced last year it had agreed to sell its stake to India's state-run ONGC company. But the Kazakhstan state oil agency exercised its pre-emptive right to buy ConocoPhillips' stake. It then agreed to sell the stake to China's CNPC.

Kazakhstan is home to 3 percent of the world's recoverable oil reserves. It has moved in recent years to exert greater management control and gain larger revenues from foreign-owned oil and gas projects. KazMunaiGas entered the Kashagan consortium as a shareholder in 2005 and has since then doubled its stake to 16.81 percent.

Xi's tour of Central Asia this week also included a stop in Kazakhstan's neighbor Turkenistan, which holds the world's fourth-largest natural gas reserves. Deals were signed there to boost gas supplies and build a pipeline to China to secure hydrocarbons for the world's largest energy consumer.

jm/kms (Reuters, dpa)