BEIJING - On
the morning of October 27, China National
Petroleum Corporation (CNPC) announced that it has
successfully acquired Canada-based PetroKazakhstan
Inc (PK) through its wholly-owned subsidiary China
National Petroleum Corporation International
(CNPCI).
On October 26, Canadian time,
China's largest oil producer saw its planned
acquisition of PK through CNPCI granted an
"unconditional" final order by the Queen's Bench
Court in Calgary, Canada. CNPC's bid for PK was
US$55 per share, totaling $4.18 billion, the
largest overseas takeover transaction ever made by
a Chinese company. Lukoil of Russia, one of CNPC's
major rivals in the deal, made no appeal, marking
the completion of all legal procedures for the
transaction. Afterward, CNPC announced the
completion of the transaction.
On October
26, Chinese Premier Wen Jiabao met Kazakhstan's
Prime Minister Danial Akhmetov in Moscow while
attending the
Shanghai
Cooperation Organization Summit. Both the premier
and the prime minister expressed their strong
support for the mutual-benefit cooperation between
CNPC and KazMunaiGaz over PK after the completion
of the acquisition. Some days earlier, CNPC had
agreed to sell certain assets of PK to KazMunaiGaz
as a condition of the deal.
The Kazakh
prime minister promised to help resolve any
further problems of PK in Kazakhstan together with
CNPC after the deal is closed. Early in the
shareholders meeting of PK held last Tuesday,
99.04% of all the voting shares were affirmative
for the acquisition. According to the relevant
transaction procedures, the outcome of the
shareholders meeting needs to be sanctioned by the
Canadian court.
However, in the court
hearing last Tuesday, Lukoil lawyers claimed that
Lukoil has the "right of first refusal" to buy a
50% stake in Turgai Petroleum, a joint venture
between PK and Lukoil. This resulted in a
postponement of the court ruling to the following
day.
On August 21, CNPC and PK concluded
their negotiations over the transaction with the
signing of an "Arrangement Agreement". According
to CNPC, after two months of intense work, all the
formal approvals and legal procedures have been
obtained and completed. At present, the CNPC staff
is working with PK and the handover of the
business is under way. The actual operations of PK
are continuing as usual, with employees
unaffected.
PK Inc is an international
energy company registered in Canada, with all of
its assets, such as oilfields and refineries, in
the Republic of Kazakhstan. PK's total annual
production capacity of crude oil exceeds seven
million tons.
CNPC stated that it has
developed good relations with the Kazakh
government. The cooperative Aktobe project was
hailed by Kazakh President Nazarbayev as a "model
for Sino-Kazakh economic cooperation".
Accordingly, CNPC has said it will choose to
cooperate with KazMunaiGaz, the state oil company
of Kazakhstan, to operate and manage the PK
project. The two parties signed a memorandum of
understanding on October 15, according to which
KazMunaiGas will obtain a certain amount of PK
shares, enough to have strategic control over the
development of the country's mineral resources,
together with equal rights for the joint
management of the Shymkent refinery and its
products, widely regarded as one of PK's most
important assets.
PK owns 12 oil fields,
and six exploration block licenses in Kazakhstan,
with great exploration potential. CNPC said it is
confident that taking advantage of CNPC's strength
in capital, technology and management, as well as
CNPC's valuable experience in Kazakhstan, the
production capacity of PK will be increased, and
thus provide the Sino-Kazakhstan oil pipeline
expected to be completed at the end of this year
with a reliable supply. The increase of investment
in Kazakhstan and the acceleration of PK's
development will help to ensure a stable supply of
oil products within Kazakhstan and boost the local
economy in the process, according to
CNPC.
