Chinese company to acquire Canadian energy company''s Kazakh oil assets
27 October 2006
Mumbai:
China is pushing deeper into the energy market on
its own with its top financial conglomerate CITIC Group
agreeing to buy the Kazakhstan oil holdings of Canada's
Nations Energy Company Ltd for $1.91 billion.
Under the agreement, CITIC will develop the Karazhanbas
oil and gas field in Mangistau Oblast, Kazakhstan.
Nations Energy's Karazhanbas field has proven reserves
in excess of 340 million barrels of oil, with current
production of over 50,000 barrels a day. It also includes
a 100 per cent stake in transport service provider Argymak
Trans Service LLP and drilling and training services
provider Tulpar Munai Services LLP. The rights are valid
until 2020.
"We will focus on cooperating with Nations Energy's
current oil customers, suppliers and partners but there
are no clear plans to sell oil to China," Xinhua
news agency quoted a CITIC source as saying.
The acquisition will "provide CITIC with a proven base for its overseas energy business expansion strategy in one of Central Asia's most dynamic and successful oil producing countries," said Zhang Jijing, director of CITIC.
There has been speculation that CITIC would team up with Indian oil major, Oil and Natural Gas (ONGC), for a joint bid. In the last 12 months, both China National Petroleum and Sinopec have on two separate occasions joined hands with ONGC to submit joint bids for oil assets. CITIC, however, will be going it alone for this acquisition.
CITIC
will buy shares in Nations Energy under a Canadian court-approved
arrangement. As part of the arrangement, Nations Energy
will transfer its non-Kazakhstan assets, namely operations
in Azerbaijan, Indonesia and California, to a new company.
Ecolo Investments, which owns 76 per cent of Nations
Energy, has agreed to support the CITIC takeover, unless
a competing bid comes in.
The deal still requires approval from the Kazakhstan
government and CITIC expects to conclude the deal by
December. The proposed transaction also needs approval
of Nations Energy shareholders and courts in Alberta
province.
CITIC, a Beijing-based investment group with operations across the globe, has already a presence in Central Asia through construction of a soda ash project in Uzbekistan and supplying railway coaches in Turkmenistan.
Nations
Energy was set up in 1996 and acquired the Kazakhstan
oil
field in 1997. Since then, it has grown production at
the oil field from 4,900 barrels per day to an average
41,000 barrels per day in 2005.