Kazakhstan state-owned oil firm KazMunaiGaz to buy 8.4% stake held by ConocoPhillips in the world’s largest oil find in five decades for $5 bn. It will then sell the stake to China  National Petroleum Corp for a reported $5.3-5.4 bn

New Delhi : State-owned ONGC has lost the giant Kashagan oilfield to Chinese after Kazakhstan blocked its $5 billion deal to buy US energy major ConocoPhillips’ stake in the Caspian Sea oilfield.

ONGC Videsh, the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), had in November last year struck a deal to buy ConocoPhillips’ 8.4 per cent stake in Kazakhstan’s biggest oilfield, Kashagan for $ 5 billion.

As per Kazakh law, the Central Asian nation had the right of first refusal or pre-emption rights that allowed it an option to step in and buy the stake at the price agreed between the Indian firm and ConocoPhillips. The Kazakh government has decided to exercise its ROFR and acquire the stake held by ConocoPhillips, sources with direct knowledge of the development told PTI.

The Central Asian country’s Oil and Gas Ministry has informed ConocoPhillips its national oil company KazMunaiGaz will buy the US oil company’s 8.4 per cent interest in the world’s largest oil find in five decades for about $ 5 billion. This stake will then be sold to China National Petroleum Corp (CNPC) for a reported $ 5.3-5.4 billion.

Kashagan, a Caspian Sea field 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 $48 billion, double the early estimates.

According to Kazakh law, the government has the right to buy any oil asset for sale in the country at the price agreed on by the buyer and seller.

While ONGC got nod of the partners for acquisition of ConocoPhillips stake at end of January, Kazakh government had time till July to approve the transaction. 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.

Kazakhstan, home to 3 per cent of the world’s recoverable oil reserves, has moved in recent years to exert greater management control and secure bigger revenues from foreign-owned oil and gas projects. Kazmunaigas entered the Kashagan consortium as a shareholder in 2005 and has since then doubled its stake to 16.81 percent.

Kashagan, with reserves estimated at 35 billion barrels of oil in place, is expected to produce its first oil in September.

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