CITIC to buy Kazakhstan oil assets
(AP)
Updated: 2006-10-26 14:49
In China's latest big overseas oil deal, government conglomerate CITIC Group
plans to buy Nations Energy Co.'s oil assets in Kazakhstan for US$1.91 billion
(euro1.5 billion), the companies said Thursday.
The purchase, which
requires approval by Calgary, Canada-based Nations Energy shareholders and the
governments of Canada and Kazakhstan, would be China's third-largest acquisition
of overseas oil assets.
Privately held Nations Energy's controlling
shareholder, Ecolo Investments Ltd., has agreed to back CITIC's offer deal
unless the company receives a superior one before the purchase is finalized, the
companies said in a statement. Ecolo owns 76 percent of Nations Energy.
The deal is due to be completed in December, it said.
"We
believe this is a fair price for Nations Energy shareholders and optionholders
and the board of directors has unanimously agreed to recommend this
transaction," David G. Wilson, a director for Nations Energy, said in the
statement.
The purchase is only of Canada-based Nations Energy's biggest
asset, the Karazhanbas field in Kazakhstan, which has proven oil reserves
exceeding 340 million barrels, and current production of over 50,000 barrels of
oil a day.
The company said it plans to divest itself from smaller
assets it has in Azerbaijian, Indonesia and California.
CITIC, which has
significant infrastructural investments in Central Asia, is planning to build a
medium-sized refinery at Karazhanbas, said Zhang Jijing, a CITIC Group director.
"This is an excellent platform for CITIC's further diversified
investment and business cooperation in Kazakhstan," Zhang said in the statement.
China has moved aggressively to buy up energy assets overseas to help
fuel its booming economy and improve its energy security.
Last year,
state-owned China National Petroleum eclipsed Russian rivals to acquire an oil
field in Kazakhstan for US$4.2 billion and built a pipeline to carry Kazakh
crude to China.
In April, CNOOC, the country's offshore oil producer,
acquired a US$2.3 billion stake in a Nigerian offshore oil field.
China
Petrochemical Corp., or Sinopec Group, in late June agreed to buy Anglo-Russian
oil producer TNK-BP Holdings oil production unit Udmurtneft for US$3.5 billion.
But the deal called for it to sell 51 percent to Russian state oil company OAO
Rosneft.
The Karazhanbas field was discovered in the 1970s and was in
decline when Nations Energy acquired it in 1997 and drilled new wells, upgraded
existing wells and added new production facilities, according to the company's
Web site.
According to the Nations Energy's Web site, the company's
chairman is Indonesian tycoon Hashim Djojohadikusumo, a son of Sumitro
Djojohadikusumo, who was an economic advisor to former leader Suharto.
Nations Energy had been seeking a buyer for more than a year and reportedly
unsuccessfully tried to sell itself to China National Petroleum Corp. and CNOOC
Corp.
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.
CITIC Resources, a unit of CITIC Group
with shares traded in Hong Kong, recently bought a 51 percent stake in an
Indonesian field for US$97.4 million.
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