Existing owners to buy BG Group's stake in North Caspian Sea PSA

May 15, 2003
BG Group announced Friday that five of the six partners in the North Caspian Sea production-sharing agreement project elected to purchase BG's interest, preempting BG's previous agreements to sell the stake to two Chinese companies.

By OGJ editors
HOUSTON, May 16 -- BG Group PLC announced Friday that five of the six partners in the North Caspian Sea production-sharing agreement project elected to purchase BG's interest, preempting BG's previous agreements to sell the stake to two Chinese companies.

The owners used a contract clause to block BG's plans to sell its PSA interest to CNOOC North Caspian Sea Ltd., a wholly owned subsidiary of CNOOC Ltd. and to Sinopec International Petroleum Exploration & Production Corp., a unit of China Petrochemical Corp. (Sinopec).

The North Caspian Sea PSA project covers more than 5,600 sq km, including Kashagan field. BG said Kashagan field holds gross reserves under a natural depletion mode of 7-9 billion boe.

BG International Ltd., a unit of UK-based BG, planned to divest its interest in two transactions. CNOOC and Sinopec each agreed to acquire an 8.33% interest in the PSA for $615 million (OGJ, Mar. 17, 2003, p. 42).

"The decision is consistent with owners' rights, driven by the consideration of self-interests and not that unexpected even though we would have liked a different one," Wei Liucheng, CNOOC chair and CEO, said in a statement.

Italy's ENI SPA unit Agip SPA, ExxonMobil Corp., Royal Dutch/Shell Group, Total SA, and ConocoPhillips exercised their pre-emptive rights. The preemption transactions remain subject to approval by the Kazakhstan government.

Upon completion of the preemption transactions, Agip Caspian Sea BV, ExxonMobil Kazakhstan Inc., Shell Kazakhstan Development BV, and Total E&P Kazakhstan each will own 20.37%. ConocoPhillips Petroleum Kazakhstan Ltd. will own 10.19%. Japan's Inpex Corp. will maintain its 8.33% interest. Agip Caspian is the operator.