Kazakhstan formalizes purchase of BG stake

May 04, 2005 02:00 AM

Kazakhstan's national oil company signed the final documents to purchase half of British Gas' stake in a project to develop a Caspian oil field, formally taking a greater role in a part of its economy long dominated by foreigners.
KazMunaiGaz and members of an international consortium led by Italy's ENI sealed the deal in which KazMunaiGaz bought 8.33 % of British Gas Group's stake in the project to develop the Kashagan field for about $ 913 mm.

The Kashagan field, which lies beneath the northern part of the Caspian Sea, was discovered in 2000 and has an estimated 5.29 bn tons of oil. Production there is expected to start in 2007 or 2008.
The purchase of a stake in the 40-year Kashagan project would let the ex-Soviet republic earn $ 85 bn over the life of the project, Kazakh Energy Minister Vladimir Shkolnik said.

British Gas last year agreed to sell its 16.67 % share in the project to its consortium partners, but the Kazakh government suspended the deal, claiming it had pre-emptive rights to the stake. The deal to sell half its stake was announced in March, five months after parliament approved a bill giving the government priority in buying stakes in energy projects.
British Gas has said it intended to sell the remaining half of its stake to the other consortium members, which also include France's Total, Shell, Japan's Inpex, as well as ExxonMobil and ConocoPhillips of the United States.

Source: Associated Press
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