Kashagan and Karachaganak: Chinese scenarios
Finally, Kazakhstan used its priority rights to purchase an 8.4% share in Kashagan field, previously owned by ConocoPhillips. Its share in the world's largest oil and gas project, the US Company will sell to JSC NC KazMunayGaz(KMG) for $5 billion. The deal will be completed in the fourth quarter of 2013.
Who will sell the share and to whom?
After purchasing the shares of ConocoPhillips, KazMunaiGaz will own 25.21% stakes, and at some point, Kazakhstan will become the major shareholder in the project. In specific, the largest shareholder will be an offshore company KMG Kashagan B.V., registered in the Netherlands, which is owned by the KMG.
However, September 7, during the official visit, Xi Jinping, President of the People's Republic of China announced that as a result of the negotiations with Nursultan Nazarbayev, President of Kazakhstan, “an agreement was obtained regarding the China’s share participation in Kashagan field”. According to Bloomberg, the share will make 8.33%. As a result, the oil companies of China will obtain the long-awaited asset- they will receive a share in the field, the largest among those discovered over past 30 years in the world. And here comes a big issue. The fact is that two years ago the head of the national company has announced that its share in Kashagan will be transferred to the JSC Exploration & Production KazMunaiGaz(E&P KMG). According to the E&P KMG information, one of its shares already belongs to the China Investment Corporation (CIC), a Chinese correspondent of the Samruk Kazyna Fund. That means in case of selling the share of 8.33% to CNPC, about one third of the remaining 16.88% will belong to another Chinese giant-the CIC. Therefore, the Chinese companies together will have the direct control of 14% in Kashagan project. Such 14% will be the share only if the Chinese companies will not buy the E&P KMG shares at the Stock Exchange.