Uchenna Izundu
International Editor
LONDON, Mar. 23 -- KazMunaiGaz Exploration & Production JSC (KMG EP) is carrying out due diligence toward purchase of a 33% stake of PetroKazakhstan and also is assessing whether to acquire a 50% stake in Nations Energy, said KMG EP Chief Executive Askar Balzhanov in an interview.
Balzhanov told OGJ these propositions are attractive because they have good fields and excellent internal efficiency. Acquiring additional assets would help KMG EP achieve significant growth and position itself as a national champion, he added. "We want to be the second biggest oil producer in Kazakhstan." At present, it is third.
KMG EP wants to increase oil production by 50% and boost its reserves by 35-40%. In 2006, it produced 192,000 b/d of oil from assets in western Kazakhstan and holds 1.5 billion bbl of proved and probable reserves.
PetroKazakhstan, purchased by China National Petroleum Corp. in 2005 for $4.2 billion, produces 110,000 b/d of oil. Nations Energy, recently bought by China's Citic Group for $1.9 billion, produces 45,000 b/d of oil. Karazhanbas oil field is the main asset of Nations Energy in Kazakhstan.
Balzhanov expects to submit an internal report to the KMG EP board of directors within the next couple of months about these possible acquisitions, he said.
National Kazgermunai
In addition, KMG EP has offered its parent company, JSC National Co. KazMunaiGas, $1.07 billion for a 50% stake in National Kazgermunai LLP. KMG EP's shareholders are to vote on that offer Apr. 12. Balzhanov said it was pursuing the deal because the company produces 60,000 b/d of oil from young fields and has a favorable tax regime. KMG EP will meet investors in Boston and New York to discuss the acquisition.
KMG EP also is in early talks with western majors about asset swaps so the company can diversity its portfolio, he added, but he declined to give details.
"With oil price increases and greater competition in the sector, we don't want to be lost in the process," Balzhanov said. "We want to integrate with the international oil industry and recognize that we must play the rules of the game. We have adopted standards and procedures used by western majors and adopted a code of corporate governance to be more transparent."
Contact Uchenna Izundu at [email protected].
