Kazakhstan

KazMunaiGas to sell half of Kashagan stake to state fund

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Kazakhstan’s state oil and gas company KazMunaiGas (KMG) will sell half its stake in the giant Kashagan oilfield to the country’s sovereign wealth fund Samruk-Kazyna for $4.7 billion, KMG’s head said on Wednesday.

KMG, which holds 16.81 percent in the offshore field, hopes to close the deal in November, Sauat Mynbayev told reporters.

In July KMG first announced its plans to sell half of the Kashagan stake to Samruk, saying it planned to use the proceeds to reduce its debt related to this oil project by about $2.2 billion.

Mynbayev said Samruk was considering plans to borrow on capital markets to finance the purchase of KMG’s stake.

«Samruk will borrow funds, partly on the internal market and some part on the external one,» he said.

«A small part will come from the (National) fund,» he said, referring to the Central Asian nation’s «rainy day» reserve replenished with windfall oil export revenues.

He gave no details.

After long delays and cost overrruns, Kashagan finally began production in September 2013 but halted operations a few weeks later after gas leaks were detected in its pipelines.

It is not expected to restart output before the end of 2016 or early 2017.

Besides KMG, the Kashagan consortium includes Eni, Exxon Mobil, Royal Dutch Shell, Total , China’s CNPC and Japan’s Inpex.

Reuters