April 17 (Bloomberg) -- PetroChina Co., Asia’s biggest crude producer, plans to pay as much as $1.4 billion for a stake in an oil company in Kazakhstan to take advantage of lower commodity prices and expand overseas, Chairman Jiang Jiemin said.

PetroChina is buying 50 percent of AO Mangistaumunaigas through its unit CNPC Exploration & Development Co., Jiang said in an interview in Beijing yesterday. Kazakhstan’s state-owned KazMunaiGaz National Co. will own the rest, he said.

China and Kazakhstan signed 11 accords yesterday and agreed on $10 billion in loans to the Central Asian nation in return for the right to invest in Mangistaumunaigas. China is securing energy resources to feed its economy, the world’s third largest, by providing loans to Brazil, Russia and Venezuela.

“China needs to diversify its resource base to boost national energy security while Kazakhstan needs the funding to monetize its vast oil and gas reserves,” Gordon Kwan, Hong Kong-based head of energy research at Mirae Asset Securities Co., said in an e-mail reply to questions.

Kazakhstan, the biggest energy producer in the former Soviet Union after Russia, received an estimated $21.1 billion in exploration and production investment last year, a 19 percent increase from 2007, Sauat Mynbayev, the nation’s energy minister, said in January. It holds 3.2 percent of the world’s proven oil reserves, according to BP Plc.

“We will jointly operate” Mangistaumunaigas, Jiang said. The low oil prices “are an opportunity” for PetroChina to expand its overseas operations, he said.

Oil Production

Mangistaumunaigas probably produced 5.8 million metric tons, or about 42.3 million barrels, of oil in 2007, compared with 5.7 million tons in 2006, Akbala Alekesheva, a spokesman, said in January 2007. Mangistaumunaigas has total oil reserves of 812 million tons, Reuters reported in October.

PetroChina shares fell 10 cents to HK$6.73 in Hong Kong. They have risen 14 percent in the past six months, more than the 7.2 percent gain in the benchmark Hang Seng Index.

PetroChina is seeking opportunities to buy assets in “non- geopolitically sensitive” regions, Jiang said in the interview after a signing ceremony with KazMunaiGaz yesterday.

Venture Partners

PetroChina’s parent China National Petroleum Corp. is in discussions with BP, Exxon Mobil Corp. and Royal Dutch Shell Plc to jointly develop overseas fields, said Jiang, who is also president of China National Petroleum.

“The deal being discussed with BP is not a big one,” Jiang said.

Hong Kong-listed PetroChina is holding talks with Shell on a potential joint bid for a field in Iraq, he said.

Shell Chief Executive Officer Jeroen van der Veer told reporters in Beijing on April 14 that The Hague-based company is in talks with Chinese companies on bidding jointly for contracts to develop Iraqi crude deposits.

“We are in the process of forming partnerships for certain bids and Chinese companies are part of that,” van der Veer said. The deadline for proposals will probably be at the end of June or early July, he said, without identifying the partners.

“Iraq is not sensitive, Iran is,” PetroChina’s Jiang said. PetroChina’s parent China National Petroleum will operate in those “sensitive” areas, he added, without giving details.

China National Petroleum led development of the first oil field in Sudan, where Sudanese President Umar al-Bashir is accused by the International Criminal Court of committing war crimes and crimes against humanity to crush an insurgency.

The United Nations estimates as many as 300,000 people have died during the conflict, and almost 3 million have fled their homes. The government puts the death toll at 10,000.

Exploration Unit

PetroChina and China National equally own CNPC Exploration, which holds assets in countries including Indonesia, Venezuela and Oman.

PetroChina may acquire parent China National’s 50 percent stake in CNPC Exploration at the end of this year, Jiang said, citing the current “low oil price cycle.”

PetroChina’s crude production rose 2.9 percent to 871 million barrels last year, the company said last month.

Separately, the Chinese government should adjust its windfall tax levy following a change in the domestic fuel pricing system, Jiang said yesterday, without elaborating.

The government replaced a guidance band for retail fuel prices with a market-based ceiling that includes the cost of crude oil, taxes and an “appropriate profit” for refiners.

Chinese oil producers pay a tax on revenue from crude sold above $40 a barrel under a levy introduced in March 2006.

To contact the reporter on this story: Eugene Tang in Beijing at eugenetang@bloomberg.net.

Last Updated: April 17, 2009 05:35 EDT