KazMunayGas to sell half of Kashagan stake

ASTANA, October 1, 2015 – Kazakhstan’s state-owned petroleum company KazMunayGas will sell half its stake in Kashagan, the country’s largest oilfield, to the state fund Samruk-Kazyna, the company said to reporters on Thursday.

Company chairman Sauat Mynbayev announced the price of the sale as $4.7 billion. Developing the Kashagan field had high capital costs, more than five times the cost of oil development in Saudi Arabia, and Mynbayev expects the sale will cover his company’s around $2.2 billion of debt. The sale is expected to close in November.

The Samruk-Kazyna sovereign wealth fund “will borrow funds, partly on the internal market and some part on the external one,” in order to fund the sale, Mynbayev said to reporters.

KazMunayGas, France’s Total, ExxonMobil, Shell and Italian energy company Eni each hold a 16.8-percent stake in the venture, with the remainder split between Japan’s Inpex (7.56 percent) and the Chinese National Petroleum Company (8.4 percent).

The Kashagan oilfield has between 7 billion and 13 billion barrels of recoverable reserves. The project was shut down in 2013 due to pipeline malfunction, and is scheduled to continue production from the field by the first quarter of 2017. The field, once it reaches full production, could produce up to 1.5 million barrels of oil per day.

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