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Wed, Oct 05, 2005 - Page 12 News List

Kazakhs seek portion of oil firm taken over by China

AP , ALMATY, KAZAKHSTAN

Kazakh oil minister Vladimir Shkolnik said yesterday that Kazakhstan would seek to acquire a portion of a major Canada-based oil producer that had reached a take-over deal in August with China's largest state oil company.

China National Petroleum Corp (CNPC) agreed to pay US$4.2 billion for PetroKazakhstan Inc, which is based in Calgary, Alberta, but has all of its production in Kazakhstan. The deal has yet to be approved by shareholders and the Kazakh government.

An agreement by CNPC to sell part of PetroKazakhstan to a Kazakh state company could help to smooth approval of its agreement to buy the Canadian firm.

"Irrespective of what will happen to the shares of the PetroKazakhstan company, I think that our national oil company [KazMunaiGaz] will have an appropriate share that will allow our proper work in the area," Shkolnik said.

"It's a very serious question for us, because we are talking about a strategic facility that is responsible for energy supplies in the huge southern Kazakhstan region," Shkolnik said.

"Kazakhstan will do everything to retain strategic control over these resources," he said.

Shkolnik didn't say how big a stake the government wanted.

The Kazakh government has in recent years been aggressively trying to expand its own assets in the country's vast energy sector, which is currently dominated by Western investors.

Last month, CNPC denied that it was negotiating to sell part of PetroKazakhstan to KazMunaiGaz. The denial came after the Asian Wall Street Journal, citing unidentified sources, said CNPC was negotiating to sell up to 50 percent of the company to KazMunaiGaz.

KazMunaiGaz's vice-president Makhambet Batyrbayev said yesterday that Kazakhstan needed to have a controlling share in PetroKazakhstan "for the sake of national economic security."

"We are in negotiations," he said.

In a sign of the Kazakh government's reluctance to let the CNPC control all PetroKazakhstan assets, President Nursultan Nazarbayev's daughter, Dariga Nazarbayeva, who is a lawmaker, urged the government last month to withdraw PetroKazakhstan's oil exploration license for alleged violations of environmental laws and price-fixing.

PetroKazakhstan says it has reserves of 550 million barrels in Kazakhstan, which exports about 800,000 barrels of oil a day.

China's bid for PetroKazakhstan comes amid a massive effort by Beijing to secure foreign energy supplies for its booming economy, whose dependence on imported fuel is soaring.

Kazakhstan, a vast, sparsely populated former Soviet republic of some 15 million people, is expected to become one of the world's lar-gest oil exporters. The discovery of its vast Kashagan field on the Caspian Sea in 2000 prompted some in the industry to call it the "Kuwait of Central Asia."

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