Sinopec to buy BG Group's North Caspian Sea interests in $615 million deal

By OGJ editors

HOUSTON, Mar. 11 -- Sinopec International Petroleum Exploration & Production Corp., a unit of China Petrochemical Corp. (Sinopec Group), agreed Monday to acquire from BG Group its remaining 8.33% interest in the UK-based company's North Caspian Sea production-sharing agreement project for $615 million. The agreement follows close on the heels of BG's announcement made late last week to sell 8.33% interest in the project to CNOOC North Caspian Sea Ltd., a wholly owned unit of China's CNOOC Ltd. for $615 million (OGJ Online, Mar. 10, 2003).

Sinopec's deal with BG is contingent upon agreement from both China and Kazakhstan as well as the waiving of any pre-exemption rights of other existing PSA partners.

The North Caspian Sea PSA, which is operated by Italy's ENI SPA, includes Kashagan oil field, the Kalamkas oil discovery and the Kairan, Aktote, and Kashagan SW prospects. ENI holds 16.67% interest; other partners are ExxonMobil Corp., Royal Dutch/Shell Group, and TotalFinaElf SA, each with 16.67% interest; and ConocoPhillips and Inpex Corp., each with 8.33% interest.

The deal, BG said, would help the company better maintain its natural gas-focused strategy. "BG remains strongly committed to Kazakstan through retention of our key interests in the giant gas condensate field at Karachaganak and in the Caspian Pipeline Consortium," noted BG Chief Executive Frank, Chapman.

The North Caspian Sea PSA covers 5,600 sq km of the Kazakhstan section of the Caspian Sea.