KazMunaiGaz May Transfer Kashagan Stake to Traded Unit

KazMunaiGaz National Co. may transfer its stake in the Kashagan oil field to its London-traded unit, said Kairgeldy Kabyldin, the chief executive officer of the Kazakh state oil producer.

“We are considering this as one of the options,” Kabyldin said today in an interview in Almaty, the capital. “There is no approved plan yet.”

KazMunaiGaz said in March it plans to borrow $1 billion this year to cover costs at Kashagan, one of world’s largest oil fields. The company also said it may use some of the proceeds from a possible sale of 5 percent in its KazMunaiGas Exploration Production unit for the investment.

“If KazMunaiGas EP eventually gets the Kashagan stake, this would be beneficial for all parties involved,” Petr Grishin, senior credit analyst at VTB Capital, said in a research note today. KazMunaiGaz National will transfer the cost of capital investments in Kashagan to its cash-rich unit, while KazMunaiGas EP will “acquire fantastic upside” with a stake in the new giant oilfield, Grishin said by phone today.

KazMunaiGas EP shares climbed as much as 3 percent to $20.60, heading for the biggest gain in two weeks as of 11:11 a.m. in London. The yield on KazMunaiGaz National’s dollar-denominated notes due in 2021 fell 4 basis points to 5.478 percent, the lowest level since they were sold in November 2010.

2012 Production

KazMunaiGaz must invest about $1.4 billion in Kashagan this year, Tolegen Bozzhanov, a managing director at the state company, said March 14. Production is scheduled to start in 2012 after years of postponements and is expected to reach oil output of 300,000 barrels a day by 2014.

KazMunaiGas EP had financial assets of about 720 billion tenge ($5 billion) at the end of March, mostly in cash, term deposits and investment in its parent’s debt, according to a company conference call on May 10.

The Kazakh state company holds a 16.8 percent stake in the field, as do Eni SpA, Royal Dutch Shell Plc, Exxon Mobil Corp. and Total SA, according to the website of their North Caspian Operating Co. venture. ConocoPhillips holds 8.4 percent and Japan’s Inpex Corp. has 7.56 percent.

KazMunaiGas EP doesn’t plan to buy ConocoPhillips’ stake, Interfax reported last week, citing CEO Askar Balzhanov. John McLemore, a ConocoPhillips spokesman, declined to comment on whether the company plans to sell its stake.

An expansion of Kashagan, the so-called phase two, is effectively frozen as the government is not satisfied with the proposed cost of the current stage, Platts reported yesterday, citing Kenzhebek Ibrashev, head of KazMunaiGaz National’s KazMunaiTeniz unit.

-- With assistance from Anna Shiryaevskaya and Denis Maternovsky in Moscow. Editors: Torrey Clark, Alex Devine