09 September 2013, News Wires – China and Kazakhstan inked 22 agreements worth a total of about $30 billion on Saturday, including a $5 billion deal that gives China a stake in the giant Kashagan oil project.
According to a Reuters report, a sale and purchase agreement was signed, in the presence of the two country’s presidents, by the heads of Kazakh state oil and gas company KazMunaiGas and China National Petroleum Corp (CNPC) for the transfer of an 8.33% stake in the Caspian Sea oilfield.
KazMunaiGas head Sauat Mynbayev told reporters that under the deal, CNPC would also pay up to $3 billion to cover half of Kazakhstan’s funding of the second phase of the Kashsagn development, which is scheduled to start after 2020.
“We suppose that the transaction will be closed by late September or late October,” a Kazakh official told Reuters.
“The two governments hail and support this agreement,” Chinese President Xi Jinping was quoted as saying at a news briefing following talks with Kazakh President Nursultan Nazarbayev.
Nazarbayev noted several other deals made with China in the oil and gas sector, including an agreement to build a new oil refinery, which Kazakhstan needed “so much”.
The Kashagan deal follows Astana’s decision in July to use its pre-emptive right to buy an 8.4% stake in the oilfield that US major ConocoPhillips was selling for $5 billion.
ConocoPhillips announced last year it had agreed to sell the stake to India’s state-run company ONGC. The sale to CNPC now blocks India’s plan to enter Kashagan.
KazMunaiGas holds a 16.81% stake in Kashagan, along with Italy’s Eni, US major ExxonMobil, Anglo-Dutch supermajor Shell and France’s Total. Japan’s Inpex owns 7.56%.
Kashagan and neighboring fields in the North Caspian are estimated to hold 35 billion barrels of oil, with between 9 billion and 13 billion barrels recoverable reserves.