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China has better chance than India for joining Kashagan project: analyst

10 June 2013 12:01 (UTC+04:00)
China has better chance than India for joining Kashagan project: analyst

By Aynur Jafarova

China has greater chances than India for joining the project on the development of Kashagan, a giant oil field in Kazakhstan's sector of the Caspian Sea, according to a Kazakh analyst.

Artyom Ustimenko said specialists close to the negotiations on Conoco's share in the project are of the same opinion.

"China is a more reliable partner, having considerable financial potential to participate in such a capital-intensive project," the expert said.

However, mixed public reaction to the expansion of China's economic presence in Kazakhstan "works against it," the expert told Azerbaijan's Trend news agency.

Last year, Conoco Phillips announced plans to sell its 8.4 percent stake in Kashagan to Indian ONGC Videsh Limited for $5 billion. Other partners of the consortium did not use their pre-emption rights.

Earlier Kazakh Oil and Gas Minister Sauat Mynbayev said that Kazakhstan has the option to resell Conoco's share to China.

In mid-March, KazMunaiGas national company's executive Kurmangazi Iskaziyev told media that Kazakhstan should determine the purchase of Conoco Phillips' share in Kashagan by May 25, 2013.

The Indian government has approved ONGC's proposal on May 27 to buy the 8.4 percent share in the Kashagan project from ConocoPhillips for $5.5 billion.

Ustimenko said that after officially approving the preliminary conditions of the transaction, India informed Kazakhstan and openly supported ONGC's intention to buy ConocoPhillips' share in the North Caspian Operating Company (NCOC).

"However, the Kazakh government is unlikely to unveil a final decision on the issue until early July, taking into account the country's retaining the right to acquire an asset," Ustimenko said.

Moreover, while speaking at a briefing in Astana last month, board chairman of KazMunaiGas Lazzat Kiinov said that the national company does not intend to buy ConocoPhillips's share.

"Our share of 16.8 percent is enough for us. We do not want to be major shareholders (in the project)," Kiinov said.

He also confirmed Minister Mynbayev's remarks that the Chinese company takes an interest in entering the Kashagan project.

"All the issues (as to who will get ConocoPhillips's share) are being studied," Kiinov added.

Kashagan is one of the largest fields discovered in the past 40 years. Recoverable oil reserves of the offshore field are estimated at 11 billion barrels, whereas total geological raw material reserves stand at 35 billion barrels. Its natural gas reserves are estimated at over 1 trillion cubic meters.

According to European Commission President Jose Manuel Barroso, the development of the Kashagan field is one of the largest joint projects of Kazakhstan and the European Union in the world in recent decades.

Kazakh Minister of Economy and Budget Planning Yerbolat Dossayev said earlier that oil production at the Kashagan field might be postponed from June to early September in connection with the testing of equipment.

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