ConocoPhillips weighs exit from $46 billion Kazakhstan field
BY NARIMAN GIZITDINOV & SVETLANA ANTONCHEVA Bloomberg News
Wednesday, October 03, 2012
10/03/12 at 7:10 AM
ConocoPhillips is considering selling a stake in the $46 billion Kashagan oilfield in Kazakhstan as it divests assets to raise cash for new European and U.S. ventures, according to the Central Asian country.
ConocoPhillips has told the government that other partners in the project have expressed an interest in buying its 8.4 percent share, Oil and Gas Minister Sauat Mynbayev said Tuesday in the capital city, Astana. ConocoPhillips spokesman Daren Beaudo declined to comment.
The Houston-based company, which plans to sell as much as $10 billion in assets by the middle of next year, has said the offshore Caspian field may not fit its long-term strategy. With cost overruns and multiple delays at Kashagan over the past decade, returns have been pushed back while ConocoPhillips expands participation in areas such as the Eagle Ford Shale in Texas.
Exxon Mobil Corp. and Royal Dutch Shell Plc, two of the partners at Kashagan, are seeking bigger stakes and operating control of the project, two people with knowledge of the matter said in August. They may seek to buy ConocoPhillips's stake in the project, the people said, asking not to be identified because the talks are confidential.
Exxon and Shell are seeking to expand the development, touted as the world's biggest discovery in four decades when found, in a bid to widen profit margins. Kashagan is due to begin commercial output in the first half of next year.
The Kashagan partners are in "active commercial talks" with China about selling crude, national pipeline operator KazTranOil CEO Kairgeldy Kabyldin said Tuesday in an interview in Astana. The venture also includes Italy's Eni SpA, France's Total SA, Japan's Inpex Corp. and state-run KazMunaiGaz National Co.
The Kazakh government is awaiting documents from the partners on plans for Kashagan's second phase, Mynbayev said. First-phase output is targeted at as much as 450,000 barrels of oil a day. The budget for the first phase is set to reach $46 billion by the time the first oil is exported, a person with knowledge of the matter said in January.
ConocoPhillips may use asset sales to help fund spending as it invests an estimated $2.5 billion in Eagle Ford this year and $2.2 billion in new European projects, CEO Ryan Lance said last month.
KazMunaiGaz may be interested in buying the share in Kashagan, Lyazzat Kiinov, head of the Astana-based company, told reporters Tuesday. Paolo Scaroni, the CEO of Eni, which is responsible for delivering the first phase, declined to comment.
Original Print Headline: ConocoPhillips may sell Kazakh stake