China National Petroleum Corporation has just agreed to buy PetroKazakhstan. Despite the name, PetroKazakhstan is a Canadian company; it accounts for about 12% of oil production in Kazakhstan. The agreed price was US$4.18 billion, making it China’s biggest-ever cross-border takeover. China’s biggest takeover to date was Lenovo’s purchase of IBM’s PC unit last May for US$1.25 billion.
CNPC won the bid despite expressions of interest from India’s Oil and Natural Gas Corporation, a state-run company that indicated it could make a counter-offer. China and India are seeking to increase energy capacity as their economies expand, and this deal was especially welcome for China, coming as it did just days after China dropped its bid to acquire a stake in Unocal.
Comments to this entry
IJ
August 26, 2005
10:39 am
Anyway, the Institute for International Economics still thinks the global economy can be fixed.
It "recommends":http://www.iie.com/publications/opeds/oped.cfm?ResearchID=539 that the US and China cooperate. First, China should revalue its renmimbi upwards by "at least 10 to 15 percent, and preferably 20 to 25 percent. . . . . The United States, for its part, must initiate a serious program to increase domestic savings and thus sharply reduce its reliance on foreign capital, chiefly by restoring the budget surpluses of five years ago". Secondly, China should join with the US and "provide needed stimulus to the Doha round through offering substantial reductions in their remaining agricultural and other trade distortions."
Otherwise. . .
Curzon
August 26, 2005
6:45 pm
By Tom Bergin, European Oil and Gas Correspondent 607 words 26 August 2005
04:17 am Reuters NewsServiceLine (c) 2005 Reuters Limited
LONDON, Aug 26 (Reuters) - Chinese state oil firm CNPC may face Kazakh government opposition to its planned $4.2 billion takeover of Canada's PetroKazakhstan , possibly over ownership of the Central Asian nation's largest refinery, industry sources said.
The Kazakh government has declined to comment on the sale of PetroKaz, whose operations are based in the Central Asian state, while sources close to the situation said the government had not yet given its blessing to the deal.
PetroKaz has downplayed the need for government approval of the deal, which was announced on Monday, but industry players see this as crucial.
One Kazakh oil industry source said the government's silence could be a sign that it had yet to make a final decision on the sale of PetroKaz, which has not always enjoyed harmonious relations with its hosts.
The government, which has been exerting greater control over Kazakhstan's oil industry in recent years, could seek concessions from CNPC in return for approving the sale, industry sources said.
One sticking point could be PetroKaz's Shymkent refinery, the country's largest.
PetroKaz's ownership of the refinery has been one of the main sources of friction between the Canadian company and its hosts, and the government may seek to resolve the dispute by taking over the refinery.
But CNPC wants to hold on to the facility, sources close to the deal said.
"The refinery is a completely integral part of the company (PetroKaz) and it's one of the things that made it attractive," one source close to the situation said.
OneFreeKorea
August 29, 2005
1:18 am
Welcome to the Carnival of the Revolutions edition for August 29th. Hosting next week's edition (Sept. 5) will be Thinking-East; next up (Sept. 12) is Quid Nimis.
Radim Kolarsky
January 23, 2006
4:43 pm
Petrokazakhstan, when it was Canadian, was immensely profitable and was always seen as a juicy target by the Kazakh government as well as others (Lukoil, CNPC etc).
China will try to buy every oil asset in the world because their demand for oil rises every year. But there is more to this than just a Chinese takeover of a Canadian company. Petrokazakhstan is now owned 2/3 by the Chinese and 1/3 by the Kazakh government. For any new foreign venture, the government passed a law that will bring the state-owned oil company KMG in for 50%. Evidently, both China and the Kazakh government are securing their position in Central Asia and western companies are increasingly seen an unwelcomed guests. Moreover, there has been a systematic effort by the Kazakh government to push western companies in general out of Kazakhstan. See for example their campaign to restrict Lufthansa from flying the lucrative routes from Germany to Almaty. The honeymoon western companies enjoyed in the 90s is definitely over and the business model is changing. Westerners can still do business in Kazakhstan but the playing field has changed.