• Mon
  • Dec 22, 2014
  • Updated: 11:15pm

Citic unit spends US$995m to become major oil player

PUBLISHED : Wednesday, 24 January, 2007, 12:00am
UPDATED : Wednesday, 24 January, 2007, 12:00am
 

Citic Resources Holdings plans to pay US$995 million for almost half of parent firm Citic Group's oil assets in Kazakhstan, making it China's fourth-largest listed oil producer, according to sources.


The energy and resources unit of one of China's largest state-backed conglomerates intends to exercise an option in the second quarter to buy 47.3 per cent of Karazhanbasmunai, in which Citic Group bought a 97.6 per cent stake at the end of last year for US$1.91 billion.


Kazakhstan national oil firm Kazmunaigaz has been granted a one-year option to buy another 47.3 per cent from Citic Group, a condition made by the mainland outfit to gain the blessing from the Kazakh government for the acquisition of the strategic asset.


'Citic Resources will pay half the price paid by its parent for half the stake,' a source said. 'It will finance it by raising debt but it may also issue shares later.' A Citic Resources spokesman declined to comment on the deal.


The company has already placed US$200 million with its parent firm as 'earnest money' towards the transaction, according to sources.


They also said Citic Group was still in talks with Kazmunaigaz on the composition of the board of Karazhanbasmunai, although Citic Resources expected to gain management control.


Karazhanbasmunai, which was bought from Nations Energy of Canada, holds the exclusive rights until 2020 to develop southwestern Kazakhstan's Karazhanbas oil and gas field.


The field has more than 340 million barrels of proven oil reserves and a daily output of more than 50,000 barrels. The field is estimated by oil consultancy Wood Mackenzie to see production grow to 75,000 barrels a day in two years, according to a UBS research report.


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