ConocoPhillips completes sale of Kashagan share to KMG and views Kashagan as non-core asset 31 октября 2013, 22:28
Oil refinery near Kashagan field. ©Reuters
Kazakhstan national oil and gas company KazMunaiGas (KMG) has completed the purchase of the 8.4 share in Kashagan from ConocoPhillips American oil company. The cost of the deal is 5,4 billion dollars, Tengrinews reports citing the American company's website.
The Kazakhstan Oil and Gas Ministry notified ConocoPhillips of its intention to use its preemptive right to purchase the Kashagen share from ConocoPhillips. By doing so Kazakhstan preempted Indian ONGC Videsh Limited that was interested in joining the gigantic offshore oil project out of the deal.
After that KMG has been acting on behalf of the Kazakhstan government to finalize the deal.
It is expected that the 8.4 percents share will be subsequently resold by Kazakhstan to Chinese CNPC, that is also eager to tap into Kazakhstan's oil reserves, but is not heartily welcomed by the Kashagan consortium of western majority.
According to ConocoPhillips the main reason why the company has sold its share in the gigantic pie that everyone wants a bite from has nothing to do with the complexity of the field or the bulging expenses of the consortium to develop it. it turns out that Kashagan offshore field with its estimated reserves of 38 billion barrels is a non-core asset for the oil company like ConocoPhillips.
“This is a very important milestone for ConocoPhillips,” Don Wallette, executive vice president responsible for commercial and business development and corporate planning, is quoted at his company's website. “Since becoming an independent E&P company in May 2012, we have made significant progress on creating value for shareholders by divesting non-core assets. We appreciate the cooperation of KazMunaiGas in the successful completion of this transaction.”
Kashagan field was discovered in 2000 and is considered the world's largest discovery of the last 30 years. Its estimated oil reserve make 38 billion barrels and recoverable reserves are estimated at 13 billion barrels.
The North Caspian Operating Company (NCOC) that is developing the complex offshore field in the Kazakhstan section of the Caspian Sea includes Eni, Royal Dutch Shell, Exxon Mobil and Total with 16.81 percent each, and Japanese Inpex with 7.55. Before the transaction with ConocoPhillips was completed Kazakhstan's KMG also owned a 16.8 share in the project via KMG Kashagan B.V., now it holds 25.2 percent.