China’s oil and gas giant CNPC will in any case discuss a possible
acquisition of shares in the Karachaganak project with the British-Dutch
company Shell, CNPC subsidiary PetroChina Vice President Lu Gongxun
said.
“CNPC and Shell have a strategic partnership. As you know, Shell has
already purchased BG Group. If we are offered a share in the
Karachaganak project, we will consult with Shell,” Lu told the
journalists in the couloirs of the “Energy Security in Eurasia”
conference held in the framework of the Kazenergy Forum.
Today, because of the financial problems of the national company
KazMunaiGas (KMG), the oil establishment of Kazakhstan is considering
selling half of its 10% share in the international consortium
Karachaganak Petroleum Operating BV (KPO) that is developing the
homonymous oil and gas condensate field. The word from the sources is
that CNPC is seen as a potential buyer.
The same sources also do not rule out a possibility of CNPC buying
Shell’s entire 29.5% КРО share that it acquired as part of the BG
purchase last year.
The reason for such speculations is that KMG lacks cash to exercise
its right of first refusal. Moreover, a bill is under development to
amend the Kazakh law to remove the national company’s right of first
refusal altogether.
In April this year, the world mass media announced the news about the
merger of the Netherlands-British company Royal Dutch Shell with
Britain’s BG Group.
The two companies then said in a press release that the purchase by
Shell of the shares of BG Group Plc for almost $70 billion should be
completed in early 2016.
The Shell management explained that the purchase would help them grow
stronger and be better positioned in the current world of fluctuating
oil prices.
BG Group conducts business in 27 countries on five continents. It
focuses on the development of natural gas markets all over the world.
Consequently, by acquiring BG Group, Shell will be able to increase its
proven oil and gas resources by 25% and its production by 20%. It would
also get access to the Santos basin oil fields in Brazil, undeveloped
gas fields in eastern Africa, liquefied gas production in Australia, and
the payable and promising Karachaganak field in Kazakhstan.
In other words, after the completion of all legal procedures for a
merger, Shell could hold 29.5% of BG Group shares in the Karachaganak
project as early as at the beginning of next year.
But the Kazakh powers that be have other intentions on that score.
“At issue is the state’s right of first refusal for the purchase of
shares in this project. The lawyers of the Ministry of Energy and the
Ministry of Justice, as well as of other state agencies concerned are
researching the possible legal implications of the purchase of BG Group
by Shell, and how our laws may be applied to this deal. There is no
final answer to this question yet. So we will wait and see,”
Kazakhstan’s First Vice-Minister of Energy Uzakbai Karabalin told New
Europe.
Judging by his answer, it is clear that the Kazakh authorities are
contemplating exercising their right of first refusal in the purchase of
shares in the major Karachaganak project at its own discretion.
In this case, other questions arise: “If Kazakhstan’s lawyers can
prove and apply the right of first refusal to this purchase, how can the
government use that share? Acquire it itself or re-sell? And who should
seek to buy that share from it?”
Ten years ago, a Canadian company PetroKazakhstan that owned a number
of fields in Kazakhstan and decided to leave the market, could not sell
its assets to the buyer with whom it had a purchase agreement.
At the time, the Ministry of Energy passed, in a record short time, a
right of first refusal law for Kazakhstan’s oil and gas fields. The
government then decided to sell PetroKazakhstan’s share to CNPC.
After the purchase of such assets as the JSC MangistauMunaiGas and
the shares in the JSC Exploration and Development KazMunaiGas in late
2009, China’s net ratio in Kazakhstan’s oil production has grown to
25-27%, and of gas – to 13-15%.
In his turn, Lu said that with assets in 35 countries and with
interests in 91 projects, CNPC ranked the third among the world’s
largest oil producers.
“The low oil prices make it a good time to purchase new projects.
CNPC constantly and actively looks for new projects all over the world.
For example, CNPC has expressed an interest in the Eurasia project with
its large hydrocarbon reserves and its importance for the development of
oil production. We state that we want to participate in in,” Lu said.
According to the experts’ evaluations, the resource potential of the
Caspian region, especially that of the Peri-Caspian Depression, is about
400 billion tonnes of conventional fuel. The scientists predict about
twenty large hydrocarbon fields with total reserves of over 300 million
tonnes.
According to the data of Kazakhstan’s Ministry of Energy, in case of
implementation of the project “Eurasia”, Kazakhstan may double its
hydrocarbon reserves.
The project Eurasia will be implemented in three stages. First –
collection and processing of the past years’ data. Second – a
large-scale research. Third – drilling of a new support and parametric
well Caspiy-1.
The estimated cost of all the three stages of the project Eurasia is
$500 million. An international consortium of major oil companies will
carry out the project. It is already known that it will include not only
Kazakh and Russian companies, but also western companies, as well as
companies from Japan, Korea, and China.
PetroChina was created as a part of the Chinese state-owned CNPC in
November, 1999. Following a reorganization of CNPC, PetroChina received
the production, processing, petrochemical, and gas assets. CNPC is the
major stakeholder of PetroChina.
http://neurope.eu/article/cnpc-shell-to-discuss-possible-purchase-of-karachaganak-stake/