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Shareholders back US$4bn sale of PetroKazakhstan

"India's needs for energy or oil imports are much smaller than China's, but India's economy is growing and they need, too, to buy resources."

David Zweig, a China expert at the Hong Kong University of Science and Technology

Shareholders of Canadian-traded PetroKazakhstan Inc voted overwhelmingly on Tuesday in favor of a US$4.18 billion takeover by China National Petroleum Corp but a Canadian court put the deal on hold.

The offer, worth US$55 per share, was backed by 99.04 percent of shareholders at a special meeting in the western Canadian city of Calgary, according to company chief executive Bernard Isautier.

Helping china

The deal would help China to boost its search for foreign energy, albeit at a premium, after a previous failed bid by China National Overseas Oil Corporation (CNOOC) to buy Unocal Corp of the US for US$18.5 billion.

"We are pleased that the shareholders have considered that the proposal was the right one. Looking back at the success of PetroKazakhstan, we are very proud of what we have achieved," Isautier told reporters.

"You always have some mixed feelings when an adventure stops, but I think this was the right thing to do -- it was in the best interests of the shareholders so we are satisfied with the outcome."

The PetroKazakhstan sale still requires court approval. Late Tuesday, a Canadian judge reserved a decision until Oct. 26 after listening to four hours of arguments from lawyers for Lukoil Overseas Kumkol B.V. of Russia and PetroKazakhstan.

Lukoil aimed to block the purchase until its own claim to the Lukoil-PetroKazakhstan joint-venture Turgai Petroleum is settled.

Lukoil said it had the right to buy its partner's stake in Turgai before CNPC took over PetroKazakhstan. The case is before the Arbitration Institute of the Stockholm Chamber of Commerce.

The 24.2 percent premium over PetroKazakhstan's share price in New York that CNPC was willing to pay could have been prompted by the Unocal debacle, according to observers.

But, CNPC itself was eager to signal that this deal was different from CNOOC's take-over attempt.

China versus India?

This deal may also suggest the beginnings of a race for scarce energy resources between Asia's two largest emerging economies, China and India, according to analysts.

"India's needs for energy or oil imports are much smaller than China's, but India's economy is growing and they need, too, to buy resources," said David Zweig, a China expert at the Hong Kong University of Science and Technology.

"To continue to grow, both of these countries need to gain access to resources," he said.

Analysts said CNPC had a much stronger case than its Indian rival, state-controlled Oil and Natural Gas Corp.
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