RusEnergy

10-27-2006 Kommersant – Chinese state investment fund, CITIC, is acquiring Kazakh Karazhanbasmunay. Karazhanbasmunay is the second big production asset in Kazakhstan grabbed by the government’s companies of China. The possible transfer of Karazhanbasmunay into the ownership or under the management of Chinese oil companies threatens the plans of LUKOIL to become the second biggest player in Kazakhstan, losing only to Kazmunaygas there.
Canadian Nations Energy announced yesterday it agreed with Chinese CITIC Group about selling its Kazakh oil assets for $1.9 billion. The deal that the authorities of Kazakhstan haven’t sanctioned yet is expected to be completed by December. Karazhanbasmunay is the key asset of Nations Energy (96.4 percent). The company produces from Karazhanbas field, which proven reserves equal 46.6 million tons in crude equivalent, according to Nations. CITIC’s deal with Nations Energy signals Russia’s oil blockbuster LUKOIL will have to take pains to press the Chinese in Kazakhstan and tail only Kazmunaygas there. In Kazakhstan, LUKOIL produces crude under nine projects, participating 50:50 in most of them. The company held preliminary negotiations about acquiring Karazhanbasmunay but preferred to focus on Nelson Resources assets that it had acquired earlier. LUKOIL produced 3.67 million tons of crude in Kazakhstan (6 percent of all production) past year and intends to jump to 6 million tons in 2006 and to fetch 8 million tons to 10 million tons by 2010.