Kazakhstan is against the sale of oil assets of Nations Energy to Chinese CITIC - head of Ministry of energy (with addition)

/INTERFAX-KAZAKHSTAN, Astana, November 16, 06/ - Kazakhstan is going to prevent the sale of oil assets of Nations Energy to Chinese investment company China International Trust & Investment Corp. (CITIC Group), stated Baktykozha Izmukhambetov, the minister of energy and mineral resources of the republic. "We must, and including me - or rather, in the first place - must take urgent actions to stop this agreement on Karazhanbasmunay," he said, speaking last Wednesday on the meeting of work group of majilis (lower chamber) of the parliament of Kazakhstan on amendments in legislation in the sphere of subsurface management and oil operations. "An ambassador of this country (China. - IF-K) sent me a letter, in which he asks me to receive the chief" of CITIC, B. Izmukhambetov remarked. As it is known, the primary oil asset of Nations Energy in Kazakhstan is the field Karazhanbas. In all the company extracts 50 th. barrels of oil equivalent per diem and possesses reserves for 340 m. barrels. Nations Energy Co Ltd informed at the end of October in a widespread press release that the Chinese CITIC acquires its assets for $1.9 bn., deal conclusion is planned in December, is indicated in the message. Meanwhile, as is known, according to Kazakhstan legislation, the state has the priority right for purchase of assets of extractive industries, situated in Kazakhstan, if a decision about their sale is adopted. China continues strengthening its positions in gas-and-oil producing industry of Kazakhstan - after the acquisition of the Chinese CNPC company PetroKazakhstan last year for $4.2 bn. This time the competitors of the Chinese company also were Russian enterprises: Russneft informed about its interest in the asset, offered for sale, according to unofficial data, negotiations with Nations Energy were also carried on by LUKOIL. According to words of a representative of CITIC, which were cited in the message, the company plans the construction of oil refinery in Mangistau region (in the west of Kazakhstan), and also considers the opportunity of attracting strategic partners for the further development in Kazakhstan. Currently oil from the field Karazhanbas are transported by pipeline system of KazTransOil JSC (oil transport "daughter" of the national oil and gas company KazMunayGas) and delivered to Atyrau oil refinery. For export oil via port of Aktau on the Caspian Sea is transported to ports of the Mediterranean and Black seas and further to markets of the Eastern Europe. Nations Energy sales also a small project in Azerbaijan. The company belongs to Indonesian investors. Appurtenant to Nations Energy Karazhanbasmunay JSC in 2005 decreased oil extraction by 4% compared to 2004 - to 2.24 m. tons. By 2009 the company plans to bring the annual level of oil extraction to 3.5 m. tons. As it was reported, on November 1 several deputies of majilis on the plenary session expressed anxiety of intensification of presence of the Chinese investors in the oil and gas sector of Kazakhstan. "Before our eyes a big work on acquisition (by China. - IF-K) of several oil companies, working in Kazakhstan, is carried out, - this is very hard and even, one might say, straightforward," said Valeriy Kotovich, a majilis deputy. "I have numbers, which in case of purchase of these companies China will control about 28% of volumes of extraction in our country. In case of conclusion of the deal, which is today made with Mangistaumunaygas, this indicator will exceed 40% of oil extraction in Kazakhstan," said a parlamentarian. Mangistaumunaygas is one of big oil-producing companies in Kazakhstan. In January-September 2006 it extracted 4 m. 330.8 th. tons of oil, which is by 620.2 th. tons more than in the similar period of last year, and 143.228 m. cubic meters of natural gas (by 6.326 m. cubic meters more respectively). Last year Mangistaumunaygas mined 5 m. 660 th. tons of oil (by 7.7% more than in 2004), 213.654 m. cubic meters of natural gas (by 28.6% more). Mangistaumunay JSC was established in 1995. Since June 1996 the enterprise has got the license of the government of Kazakhstan with the term of 25 years for extraction of hydrocarbon raw materials on oil and gas fields Asar, Burmasha, Kalamkas, Zhetybay Vostochniy, on oil and gas fields Alatobe and Karagiye Severnoye, on oil-gas condensate field Zhetybay, on oil and gas field Oymasha, and in November 1996 - license for oil extraction on oil-gas condensate field Zhetybay Yuzhniy. As of the beginning of July 2006 97% of offered shares of Mangistaumunaygas JSC belonged to Central Asia Petroleum Ltd (Jakarta, Indonesia). The Chinese side at present time mines a number of big fields in the west and south of Kazakhstan. Last year an oil-pipeline from Kazakhstan to China was built with primary capacity of 10 m. tons of oil a year with subsequent double expansion. According to state statistics, in Kazakhstan in 2005 51258.2 th. tons of crude oil and 10660 th. tons of gas condensate were mined, which is respectively more by 1.2% and by 21% than in 2004. It is expected that this year about 64 m. tons of oil and gas condensate will be extracted in the republic. [2006-11-16]