China buys into giant Kazakh oilfield for $5 billion

Discussion in 'China' started by amoy, Sep 10, 2013.

  1. amoy

    amoy Senior Member Senior Member

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    China buys into giant Kazakh oilfield for $5 billion | Reuters

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    (Reuters) - Chinese President Xi Jinping struck a deal with Kazakhstan on Saturday giving China a stake in its giant Kashagan oil project, a highlight of his tour of Central Asia to secure hydrocarbons for the world's largest energy consumer.

    The $5 billion deal further increases China's rising clout in post-Soviet Central Asia, once Russia's imperial backyard, and blocks an attempt by global rival India to get a stake in the oilfield, the world's largest oil discovery in five decades.

    "The two countries have agreed on China's shareholding in the development of the Kashagan deposit," Xi told a news briefing after talks with Kazakh President Nursultan Nazarbayev. "The two governments hail and support this agreement."

    Oil and gas deals, including on building an oil refinery in Kazakhstan, are among 22 agreements worth some $30 billion reached during Xi's visit, Nazarbayev said.

    Under the Kashagan deal, Kazakhstan will sell 8.33 percent of the offshore oilfield in the Caspian Sea to China for about $5 billion.

    The sale and purchase agreement was signed by the heads of Kazakh state oil and gas company KazMunaiGas and China National Petroleum Corp CNPET.UL (CNPC) in the presence of the two presidents.

    "We suppose that the transaction will be closed by late September or late October," a Kazakh official told Reuters.

    CNPC will also pay up to $3 billion to cover half of Kazakhstan's financing of the second phase of Kashagan's development, KazMunaiGas head Sauat Mynbayev told reporters. This phase is expected to start after 2020.

    Another draft agreement, seen by Reuters, would guarantee loans from The China Development Bank and The Export-Import Bank of China - worth respectively $3 billion and $5 billion - to Kazakhstan's state holding firm Baiterek, which promotes innovation and industrial projects.

    China is already involved in a number of oil projects in its vast resource-rich neighbor, which is five times the size of France but has a population of just 17 million.

    This week, Xi visited Kazakhstan's neighbor Turkmenistan, which holds the world's fourth-largest natural gas reserves, and oversaw deals aiming to boost gas supplies and build a pipeline to China.

    INDIA'S HOPES DASHED

    The Kazakh deal comes after Astana decided in July to use its pre-emptive right to buy an 8.4-percent stake in Kashagan that U.S. oil major ConocoPhillips (COP.N) was selling for $5 billion.

    Houston-based ConocoPhillips, whittling down its worldwide portfolio of assets, announced last year it had agreed to sell the stake to ONGC (ONGC.NS), the overseas arm of the Indian state-run company.

    The sale to CNPC blocks India's plan to enter Kashagan.

    Kazakhstan, home to 3 percent of the world's recoverable oil reserves, has moved in recent years to exert greater management control and secure bigger revenues from foreign-owned oil and gas projects.

    KazMunaiGas entered the Kashagan consortium as a shareholder in 2005 and has since then doubled its stake to 16.81 percent.

    Kashagan and neighboring fields in the North Caspian hold estimated reserves of 35 billion barrels of oil, with between 9 billion and 13 billion barrels recoverable.

    A multinational consortium developing the field has invested some $50 billion in about 13 years, making it the costliest oil project in the world.

    Trial runs at the giant reservoir off western Kazakhstan are set to begin on Monday, and it may take between three weeks and a month before commercial production starts, Mynbayev said.

    During Kashagan's development, production will be gradually increased to 370,000 barrels per day in the second stage from 180,000 bpd in the first stage in 2013-14, according to North Caspian Operating Company (NCOC), which is developing the field.

    Italy's ENI (ENI.MI), U.S. major ExxonMobil (XOM.N), Royal Dutch Shell (RDSa.L) and France's Total (TOTF.PA) each hold 16.81 percent stakes in Kashagan. Japan's Inpex (1605.T) owns 7.56 percent.
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  3. Yusuf

    Yusuf GUARDIAN Administrator

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    Isn't this old news?
     
  4. amoy

    amoy Senior Member Senior Member

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    not too old , deal only reached on 7 Sept
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  5. Bilal

    Bilal Regular Member

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    I say China is expanding as an economy,They have passed usa as the world power.
     
  6. Ray

    Ray The Chairman Defence Professionals Moderator

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    The oil pipeline is vulnerable.
     
  7. no smoking

    no smoking Senior Member Senior Member

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    Maybe, but who is able to attack? India?
     
  8. t_co

    t_co Senior Member Senior Member

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    Given the idiocy of India's foreign policy, I wouldn't put it past them to try and stir up trouble next to an oil pipeline funded by a combination of US, EU, and Chinese oil producers.

    Sometimes @Ray gives me comfort - his crab mentality is painfully obvious for all to see, and if that is really the mentality permeating Indian decisionmakers, it ensures that India will never grow to the level of threatening China
     
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  9. Ray

    Ray The Chairman Defence Professionals Moderator

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    The Oil pipeline that will go to China is not owned by the EU, US, but by China.

    And it will not be attacked here, definitely not by India but as it moves into and through troubled areas.

    There are the good friends of China within China. They go by the name of East Turkistan Islamic Movement (ETIM), East Turkistan Liberation Organization (ETLO), United Revolutionary Front of East Turkestan (URFET), and the Uyghur Liberation Organization (ULO).

    It may give solace to by being ostrich like, burying your head in the sand, but for rebels anywhere in the world, a long oil pipeline is a lucrative target!
     
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  10. no smoking

    no smoking Senior Member Senior Member

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    Yes, Chinese has been setting up all kinds of infrastructures for decades and all these good friends haven't been able to make any signficant attack on any of them. This tell you who is burying his head in the sand.
     
  11. Ray

    Ray The Chairman Defence Professionals Moderator

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    If you believe that the'good friends' have not attacked, then you must be blind as a bat.

    Heard of the Urumqi attacks? The first day's rioting, which involved at least 1,000 Uyghurs. It began as a protest but escalated into violent attacks that mainly targeted Han Chinese. 197 people died, with 1,721 others injured and many vehicles and buildings destroyed. Uyghur exile groups say the death toll is higher.

    Remember the Shaoguan incident which was a civil disturbance which took place overnight on 25/26 June 2009? And that was done in in Guangdong province, China. Uyghur workers who witnessed the incident report at least 100 dead and 400 wounded) and some 118 people injured. It was because CCP did a clever trick of depopulating Xinjiang of Uighurs by pretending to be executing an ethnic program by relocating 200,000 young Uyghurs since the start of 2008. This just went sour and cause resentment all around, to include in Xinjiang.

    Even as late as 2011, Several attackers, a policeman and a civilian were killed Monday during an attack on a police station in China’s far western Xinjiang region, state media reported.
    Several killed in attack on Xinjiang police station - CHINA - FRANCE 24

    Seven people were killed on Thursday when a member of the Uighur minority drove a vehicle loaded with explosives into a crowd and blew it up on the outskirts of Aksu in China's Xinjiang region, the site of deadly ethnic unrest last year.

    On July 5 last year the regional capital Urumqi was torn apart when Uighurs vented decades of resentment on members of China's dominant Han group. Han mobs took to the streets in the following days, seeking revenge.

    Nearly 200 people were killed and 1,700 injured in all, the government says, in the worst ethnic violence in China in decades.
    Seven killed in car bomb blast in Xinjiang region - CHINA - FRANCE 24

    So, there you see, where inspite of demographic relocation of Han to counter the Uighurs in Xinjiang and the army and police repression and draconian laws, the Uighurs are targeting Han Chinese and government property to include protected places like Police Stations and so on.

    Now if a long oil pipeline goes through their territory, which would they attack - a police station or a critical economic lifeline of China, namely, the oil pipeline?
     
  12. t_co

    t_co Senior Member Senior Member

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    None of these attacks occured against critical infrastructure. The ETIM knows that if they do that, not only are their lives forfeit, but those of their families as well. Harsh, but the implied death threat against family members keeps them in line.

    Police stations and Han shops are located near major Uighur population centers. The Xinjiang pipeline transits inhospitable deserts and mountain ranges until it gets close to Kashgar. It would be highly difficult for any disaffected group to reach them.

    I'm surprised that you haven't considered the logistical and transportation difficulties involved, given that you're a former military commander.

    Second, under Chinese law, once you get out of a designated municipal area, use of lethal force is authorized in broad swathes of land around critical national infrastructure. The PLA/PAP has patrols, automated surveillance systems (electric fences, cameras, human infrared sensors), drone surveillance, automated weapons systems (landmines, armed drones on loiter), and rapid response teams ready to neutralize threats to oil and gas pipelines, should they materialize.

    Those rapid response teams are really a work of art, by the way. To cover one particular stretch of Xinjiang pipeline in 2009, the PLA attached a flight of JH-7s loaded with cluster munitions and fine-grain FLIR to snoop out and terminate any human being within 5km of that section of the pipeline. It makes other nations' counterterrorism efforts look like little kids playing a sandbox.
     
    Last edited: Sep 17, 2013

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