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Canadian court OKs CNPC purchase

These PetroKazakhstan workers at an oil field in south-central Kazakhstan will soon be working for a new employer. A Canadian court approved the China National Petroleum Corporation's offer to buy PetroKazakhstan, rejecting an attempt by the Russian company Lukoil to disrupt the deal. PHOTO: NY TIMES NEWS SERVICE

A Canadian court has approved China National Petroleum Corp's (CNPC) US$4.18 billion acquisition of PetroKazakhstan Inc through its wholly-owned international subsidiary, the company said yesterday.

The Queen's Bench Court in Calgary had unconditionally given the deal the go-head, it said in a statement.

"The transaction has been completed," CNPC said.

Xinhua news agency said it was the largest-ever overseas takeover by a Chinese company.

The court approved the US$55 per share deal after shareholders of the international energy company registered in Canada but with all its assets in Kazakhstan, voted overwhelmingly in favor of the deal last week.

For energy-hungry China it marks an important milestone in its bid to secure the energy resources it so desperately needs after the failure this year of China National Overseas Oil Corp (CNOOC) to buy US company Unocal Corp for US$18.5 billion.

The deal was nearly scuppered by Russian oil group Lukoil, which aimed to block the purchase until its claims to its Lukoil-PetroKazakhstan joint-venture Turgai Petroleum, equally owned by LuKoil and PetroKazakhstan, were resolved.

It appealed to the court saying it had the right to purchase a 50 percent stake in Turgai before CNPC took over PetroKazakhstan and said it would match CNPC's bid price if the court did not approve the deal.

"Lukoil made no appeal, indicating the completion of all legal procedures of the transaction," CNPC said.

Although the court ruling virtually seals the agreement for CNPC, the case is still before the Arbitration Institute of the Stockholm Chamber of Commerce.

State press reports said that Lukoil on Monday offered CNPC between US$650 million and US$750 million to buy the other half of Turgai.

For its part, PetroKazakhstan is also liable for a fine of around US$500 million after President Nursultan Nazarbayev signed on Monday a bill that will enable the government to review and even block sales of stakes in domestic energy firms.

Although Kazakhstan has wooed neighboring China as an obvious buyer of its growing oil output, authorities in Almaty remain sensitive about Beijing's growing influence in the former Soviet Central Asia.

There have been reports that the government would like to take control of the country's top oil refinery, the Shymkent refinery, from PetroKazakhstan.
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