Rumor: CNPC to buy 8.33% stake in Kazakh oil field for $5 billion

June 28th, 2013 (Bloomberg News) - China National Petroleum Corp. (CNPC, Beijing, China) plans to acquire an 8.33% stake in Kazakhstan’s biggest oil field for about $5 billion, Bloomberg News reported, citing people with knowledge of the matter.

CNPC intends to buy an interest in the Kashagan project from KazMunaiGaz National Co., two of the people said. They want not be identified before the deal is public.

An announcement may be made as soon as next week, the people said.

KazMunaiGaz will maintain its holdings in Kashagan, due to start production in September, by exercising an option to acquire 8.4% of the project from ConocoPhillips, the people said.

While Conoco agreed to sell to India’s Oil & Natural Gas Corp. (ONGC) last year, as the state oil company KazMunaiGaz has the right to step in and buy the shares.

CNPC’s largest foreign acquisition will deepen Kazakhstan’s relationship with China as the start of production at Kashagan, eight years late and at double the original cost, boosts oil exports. A pipeline linking Kazakhstan and China opened in 2006 and is being expanded to 400,000 barrels a day from 240,000 barrels a day.

After KazMunaiGaz completes both deals, it will have a stake of 16.88% of the Kashagan project, one of the people said. Exxon Mobil Corp., Royal Dutch Shell Plc, Total SA and Eni SpA hold 16.81% each. Japan’s Inpex Corp. has 7.56% stake.

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