China agrees US$5b oil deal with Kazakhstan
Print Edition
China struck a deal with Kazakhstan yesterday, giving the world’s second-largest economy a stake in the Central Asia country’s giant Kashagan oil project.
“The two countries have agreed on China’s shareholding in the development of the Kashagan deposit,” Xi told a news briefing after talks with Kazakh President Nursultan Nazarbayev. “The two governments hail and support this agreement.”
Oil and gas deals, including on building an oil refinery in Kazakhstan, are among 22 agreements worth some US$30 billion reached during Xi’s visit, Nazarbayev said.
Under the Kashagan deal, Kazakhstan will sell 8.33 percent of the offshore oilfield in the Caspian Sea to China for about US$5 billion. The sale and purchase agreement was signed by the heads of Kazakh state oil and gas company KazMunaiGas and China National Petroleum Corp in the presence of the two presidents.
“We suppose that the transaction will be closed by late September or late October,” a Kazakh official said.
Trial runs will begin at Kashagan tomorrow, and it may take between three weeks and a month for commercial output to start at the deposit, Sauat Mynbayev, head of Kazakh state oil firm KazMunaiGas, said.
CNPC will also pay up to US$3 billion to cover half of Kazakhstan’s financing of the second phase of Kashagan’s development, Mynbayev said. This is expected to start after 2020.
Another draft agreement would guarantee loans from the China Development Bank and the Export-Import Bank of China — worth respectively US$3 billion and US$5 billion — to Kazakhstan’s state holding firm Baiterek.
China is involved in a number of oil projects in Kazakhstan.
This week, Xi visited Kazakhstan’s neighbor Turkmenistan, which holds the world’s fourth-largest natural gas reserves, and oversaw deals aiming to build a pipeline to China.
The Kazakh deal comes after Kazakhstan decided in July to use its pre-emptive right to buy an 8.4-percent stake in Kashagan that US oil major ConocoPhillips was selling for US$5 billion.
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