China Exclusive: CITIC to acquire Kazakhstan oil assets from Canada's Nations Energy

China's CITIC Group has agreed to buy the Kazakhstan oil holdings of Canada's Nations Energy Company Ltd. for 1.91 billion U.S. dollars, said sources with CITIC on Friday.

The agreement, signed on Wednesday, will allow CITIC to develop the Karazhanbas oil and gas field in Mangistau Oblast, Kazakhstan. It has proven reserves in excess of 340 million barrels of oil and current production is over 50,000 barrels of oil a day.

Nations Energy's Kazakhstan oil assets also include a 100 percent interest in Argymak Trans Service LLP which provides transportation services and Tulpar Munai Services LLP which provides drilling and training services.

"We will focus on cooperating with Nations Energy's current oil customers, suppliers and partners but there are no clear plans to sell oil to China," said an insider with the deal who would only give his surname Lu.

According to CITIC, the deal still requires approval from the governments in Kazakhstan and could be completed by December.

The proposed transaction also needs the approval of Nations Energy shareholders and the courts in the province of Alberta.

The deal was announced on the first anniversary of the acquisition of Canada-based PetroKazakhstan Inc. (PK) by China National Petroleum Corporation (CNPC), China's largest oil producer, for 4.18 billion U.S. dollars on Oct. 27 last year. It remains the largest overseas takeover transaction ever made by a Chinese company.

The CITIC deal will help it develop its petroleum and natural gas business, said Kong Dan, chairman of the CITIC Group.

If the takeover is approved, it will provide CITIC with an important base from which it can expand its energy business in Kazakhstan, the most important petroleum producer in Central Asia, Kong said.

He said the takeover is also a good opportunity for the CITIC to diversify its investments and business in Kazakhstan.

CITIC said that it is also planning a feasibility study on developing local oil refining and is looking for partners in other sectors such as construction and financing.

CITIC Group, established by Chinese former Vice President Rong Yiren, is one of China's major finance company.

Now a large transnational conglomerate, CITIC owns 44 subsidiaries around the world, including companies in Hong Kong, the United States, Canada, and Australia. The company also has representative offices in Tokyo and New York.

CITIC's core business involves finance, industrial investment and service industries.

Source: Xinhua