China, which is aggressively seeking overseas energy assets to fuel its booming economy, said yesterday that one of its biggest conglomerates has bought the Kaz-akhstan oil assets of a Canadian company for US$1.91 billion.
Under the deal, China International Trust Investment Company (CITIC,
CITIC's bid for Nations Energy's Karazhanbas oil field had been opposed by some in the former Soviet republic, and the option for KMG may have been one way to win approval from Kazakhstan's regulatory authorities.
China's economy has seen double-digit growth in recent years, accompanied by increased demand for energy assets to improve its energy security. Kazakhstan possesses the largest oil deposits in the Caspian Sea region and produces about 1.3 million barrels a day.
In November, Kazakhstan's oil minister said he was against the CITIC deal.
"We must take extreme measures to stop the agreement on the Karazhanbas," Baktykozha Izmukhambetov said in televised remarks, referring to an oil field that is the biggest asset of Canada-based Nations Energy Co in the Central Asian nation.
But according to Xinhua, as part of the approval from Kazakhstan's regulatory authorities, KMG was given the option, exercisable within a year at a price based on CITIC's purchase price for Nations Energy.
CITIC Group is one of China's biggest conglomerates. It was set up in Hong Kong in 1979 by former vice president Rong Yiren (
In October, CITIC said it planned to buy Nations Energy's oil assets for US$1.91 billion in what would be China's third-largest acquisition of overseas oil assets.
The Karazhanbas field in western Kazakhstan has proven reserves of over 340 million barrels of oil, and current production exceeds 50,000 barrels per day.
The field was in decline when Nations Energy acquired it in 1997 and drilled new wells, upgraded existing wells and added new production facilities. Its oil is transported westward and shipped to ports in the Black Sea and the Mediterranean.
CITIC, which has significant infrastructure investments in Central Asia, is planning to build a medium-sized refinery at Karazhanbas, Zhang Jijing, a CITIC Group director, said in October.
Last year, state-owned China National Petroleum (中國石油天然氣) eclipsed Russian rivals to acquire an oil field in Kazakhstan for US$4.2 billion and built a pipeline to carry Kazakh crude to China.
In April, CNOOC (中國海洋石油), the country's offshore oil producer, acquired a US$2.3 billion stake in a Nigerian offshore oil field.
China Petrochemical Corp (