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Shell refuses to rule out blocking deals

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Mainland oil firms CNOOC and China Petrochemical Corp are lobbying Royal Dutch/Shell not to block their gas field acquisition deals in Kazakhstan - but the global giant has not ruled it out.

However analysts expect the deals, which were struck in March, to proceed smoothly. They have dismissed the latest development as a public relations exercise for the oil companies.

CNOOC and China Petrochemical - parent of listed China Petroleum & Chemical (Sinopec) - have each agreed to buy a 8.33 per cent stake in Kazakhstan's North Caspian Sea project from BG International (British Gas) for US$615 million.

Qiu Xianghua, vice-president of Sinopec International Petroleum Exploration & Production, said its chairman had written to Shell's top management and met them in Europe in an effort to persuade them against pre-empting the deal.

The Kazakhstan project's original investors - Shell, ExxonMobil, ConocoPhillips, France's TotalFinaElf, Italy's ENI-Agip and Inpex of Japan - have the right to pre-empt CNOOC's purchase by May 9 and China Petroleum's by May 19.

CNOOC chief financial officer, Mark Qiu Zilei, said it had written to the consortium members asking for 'favourable consideration'.

Mr Qiu said China's friendship pact with Kazakhstan and status as one of the world's largest oil markets, as well as Sinopec's experience in shallow water oil drilling, would be favourable to the project.

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