02 July 2015, News Wires – Kazakhstan’s KazMunaiGas (KMG) is selling one half of its stake in the giant Kashagan project in the Caspian Sea to the state sovereign wealth fund as it looks to pay down debt, according to a report.
The state-owned oil player is hoping to raise $4.7 billion from the sale of 50% of its 16.81% in the oilfield to Samruk-Kazyna, Reuters reported, citing a stock exchange announcement from KMG.
The sale is expected to close by the end of the year, it said.
KMG had consolidated net debts of $17.92 billion at the end of last year and the sale will allow the company to cut this by around $2.2 billion, Reuters said.
Situated 80 kilometres south-east of Atyrau in the Kazakh sector of the Caspian Sea, Kashagan is believed to be the world’s second biggest oilfield after Alaska’s Prudhoe Bay, with recoverable reserves estimated at 9 billion to 13 billion barrels of oil. Its natural gas reserves are estimated at more than 1 trillion cubic metres.
However, gas leaks detected at Kashagan halted oil production just a few weeks after its launch in September 2013. Output at Kashagan is not expected to restart before the end of 2016.
The Kashagan shareholders are Eni, ExxonMobil, Shell, Total and KazMunaiGas, each with 16.8%, and Japan’s Inpex and China National Petroleum Corporation (CNPC) with smaller stakes.