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Kashagan stakeholders cold on ConocoPhillips share

April 19 2013, 16:06

Partners of the Kashagan project in the Kazakh sector of the Caspian Sea express no wish to buy the ConocoPhillips share, writes IA Novosti-Kazakhstan citing Kazakh oil and gas minister Sauat Mynbayev as saying.

"Every partner of the project has the priority right to buy it, and before the country's intention to use its own right we requested interest to this share from every existing stakeholder. As far as we understood, all of them refused their right to claim the share, at least verbally," minister said during an online-conference Friday.

As he said, this fact shows the project is not simple.

"The project's return on investment, given the oil costs $90-100, is the lowest level, as huge money has been put in this project. A potential buyer should understand that all main investments are ahead," he added.

"If we want to buy the share and have a high stake on behalf of Kazmunaygas, not the government, the company should be aware how much they need to borrow in order to complete the project's investment program," warned Mynbayev.

He also noted that KMG lacks experience to handle such a giant project.

"If KMG wants to be the biggest stakeholder, it also claims the biggest role in managing the project. I would play it safe calling KMG a company with a high-level expertise needed to perform projects of this kind," Mynbayev said.

Oil minister added that companies participating in the project at the moment have the newest technologies and practice to handle big projects.

"One shouldn't let such investors go. We need to use all advantages they bring here," he said.

"Yes, there are huge volumes of oil. What price one should pay to extract them is a big question," minister concluded. 

Last week, citing unnamed sources, Bloomberg reported that Kazakhstan considers buying Conoco's share worth $5bn, before selling it to a Chinese company.

According to Mynbayev, China is interested in purchasing the share, however, no talks are being held at the moment.

In mid-March, KMG's geology and prospective projects manager Kurmangazy Iskaziyev told journalists Kazakhstan has to decide whether to buy Conoco's share or not before May 25, 2013.


 

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