After blocking ONGC Videsh Ltd's USD 5 billion deal, Kazakhstan has transferred a 8.4 per cent stake in its giant Kashagan oil field to China National Petroleum Corp (CNPC).
The deal transferring the stake in the Kashagan offshore oilfield was signed yesterday during the visit of Chinese President Xi Jinping to the energy-rich Central Asian nation, industry sources said.
OVL had last year struck a deal to buy US giant ConocoPhillips' 8.4 per cent stake in the giant Kashagan offshore oil project in the Caspian Sea. While the partners in the project approved the transaction, Kazakhstan in July exercised its preemptive buy-out right and acquired the 8.4 per cent stake ConocoPhillips held in Kashagan.
Kazakhstan's national oil and gas producer KazMunaiGaz bought the stake as a representative of the Kazakh state at the same price as agreed between OVL and ConocoPhillips.
KazMunaiGas yesterday signed a deal to sell that stake to CNPC for about USD 5 billion, they said.
Under the deal, China will help arrange a loan of up to USD 3 billion for KazMunaiGas to help it finance the second stage of Kashagan's development, due to begin after 2020.
KazMunaiGas entered the Kashagan consortium as a shareholder in 2005 and has since then doubled its stake to 16.81 per cent.
Exxon Mobil, Royal Dutch Shell, Italy's Eni, Total of France and KazMunaiGaz each hold 16.8 per cent of Kashagan. Japan's Inpex Corp has 7.56 per cent stake.
The Kashagan field, located in the shallow waters (about 5-8 metres) of the Kazakh North Caspian Sea, is the world's largest current development project.
The field, which is set to produce 370,000 barrels of oil a day, is to start output by September, eight years later than initially planned and with costs nearing USD 48 billion, double the early estimates.
Sources said this is not the first time that OVL has lost out to Chinese in Kazakhstan.
CNPC beat India by agreeing to pay USD 4.18 billion in August 2005 for PetroKazakhstan, then China's biggest overseas oil deal. At that time, Oil Minister Mani Shankar Aiyar had stated that India's bid for PetroKazakhstan was thwarted as the "goalposts were changed after the