Spending China's dollars: CITIC buys Kazakhstan oilfield

Section:

CITIC Buys Oil Company Stake for $1.91 Billion

By Scott McDonald
Associated Press
Sunday, December 31, 2006

http://news.yahoo.com/s/ap/20061231/ap_on_bi_ge/china_kazakhstan_oil

China, which is aggressively seeking overseas energy assets to fuel its booming economy, said Sunday that one of its biggest conglomerates has bought the Kazakhstan oil assets of a Canadian company for $1.91 billion.

China's CITIC Group bought the oil assets of Canada's Nations Energy Company Ltd. and granted KazMunaiGas, Kazakhstan's state-owned oil company, an option for a 50 percent interest in Nations Energy, the official Xinhua Agency said.

CITI's bid for Nations Energy's Karazhanbas oil field had been opposed by some in the former Soviet Central Asian republic, and the option for KMG may have been one way to win approval from Kazakhstan's regulatory authorities.

China's economy has seen double-digit growth in recent years, accompanied by increased demand for energy assets to improve its energy security. Kazakhstan possesses the largest oil deposits in the Caspian Sea region and produces about 1.3 million barrels a day.

In November, Kazakhstan's oil minister said he was against the CITIC Group deal.

"We must take extreme measures to stop the agreement on the Karazhanbas," Baktykozha Izmukhambetov said in televised remarks, referring to an oil field that is the biggest asset of Canada-based Nations Energy Co. in the Central Asian nation.

But according to Xinhua, as part of the approval from Kazakhstan's regulatory authorities, KMG was given the option, exercisable within a year at a price based on CITIC's purchase price for Nations Energy.

CITIC Group is one of China's biggest conglomerates. It was set up in Hong Kong in 1979 by former Vice President Rong Yiren as the government's main overseas investment arm.

The Karazhanbas field in western Kazakhstan has proven reserves of more than 340 million barrels of oil, and current production exceeds 50,000 barrels per day.

CITIC, which has significant infrastructure investments in Central Asia, is planning to build a medium-sized refinery at Karazhanbas, Zhang Jijing, a CITIC Group director, said in October.

* * *

Join GATA
at the
2007 Vancouver Resource Investment Conference
Vancouver Convention and Exhibition Centre
Sunday and Monday, January 21 and 22, 2007

http://www.cambridgeconferences.com/ch_jan2007.html

Admission is free for those who register in advance. The conference has arranged discount rates at the Pan Pacific Hotel adjacent to the convention center.

GATA will hold a reception at the conclusion of the conference: from 6 to 8 p.m. Monday, January 22, in the Cypress Suite at the Pan Pacific, 999 Canada Place. The Cypress Suite is on the hotel's restaurant level, one floor above the lobby. The reception will offer snacks, a cash bar, and some brief remarks by GATA's delegates to the conference, including Chairman Bill Murphy. There will be no admission charge for the reception but so that we might prepare better, if you plan to attend please let Secretary/Treasurer Chris Powell know by e-mail at CPowell@GATA.org.

* * *

Help Keep GATA Going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at www.GATA.org. GATA is grateful for financial contributions, which are federally tax-deductible in the United States.