Chinese conglomerate CITIC Group has agreed to pay $1.9 billion for Canada-based Nations Energy's oil assets in Kazakhstan, the companies said Oct. 26. State-controlled China International Trust and Investment Corp has so far only had limited exposure to the oil business, but the Kazakhstan foray could potentially prove a lucrative deal for the sprawling group, observers said.
The deal is the latest example of China's drive to secure global energy assets as it desperately endeavors to ensure power supplies for its fast-growing economy.
Nations Energy's Kazakh subsidiary, JSC Karazhanbasmunai, holds the rights until 2020 to develop the Karazhanbas Oil and Gas Field in Mangistau Oblast, Kazakhstan. The field has proven reserves in excess of 340 million barrels of oil and current production of over 50,000 barrels per day.
China National Petroleum Corporation last year bought Canadian-listed PetroKazakhstan, the central Asian country's third-largest oil producer, for $4.18 billion. Kazakhstan is of particular interest to Chinese companies as it borders the west of China and as such is a natural choice, especially after the construction of a cross-border pipeline. The 1,000-kilometer (620-mile) pipeline links central Kazakhstan to western China's Xinjiang region and deliveries are expected to start in mid-2006, with an initial annual capacity of 10 million tons.
Energy security is becoming an urgent priority for fast-growing China, already the world's second-largest consumer of oil after the United States. China imported 95.8 million tons of crude oil in the first eight months of the year, up 15.3% from the same period last year.
Copyright Agence France-Presse, 2006
