Chinese oil company to buy Canadian firm for $4.2B
BEIJING (AP) — State-owned Chinese oil company CNPC has agreed to buy PetroKazakhstan (PKZ), a Canadian company that is a major oil producer in China's neighbor Kazakhstan, for $4.2 billion in what would be China's first successful takeover of a foreign-listed energy firm and the latest move in its aggressive push to secure more oil.
CNPC beat rival bidders including top Indian oil firm ONGC
The deal announced Monday would give CNPC access to PetroKazakhstan's 150,000 barrels per day of production — a small fraction of China's 6 million barrels per day of consumption but a step nonetheless for the world's second-largest oil-consuming nation and its fastest-growing major economy.
It also comes just weeks after China's CNOOC was foiled in its bid to acquire the American producer Unocal for $18.5 billion.
China National Petroleum offer would pay PetroKazakhstan shareholders a total of $55 a share — $54 in cash, plus one share valued at $1 in a new company that would pursue energy deals elsewhere in Central Asia, the Canadian firm said in a statement issued in London. The offer represents a 21% premium over PetroKazakhstan's Friday closing share price of $45.40 on the New York Stock Exchange.
The deal, which requires approval by PetroKazakhstan shareholders, would add to a series of foreign oil and gas acquisitions that China hopes will secure energy supplies for its booming economy.
"It's a very high price but this is a strategic investment. Finally, it's reserves that you can bring to China," Stephen O'Sullivan, oil analyst at United Financial Group in Moscow, told Reuters.
PetroKazakhstan shareholders are to vote at a meeting in October, CNPC said in a prepared statement, and the Canadian company's board has recommended shareholders accept it.
The announcement comes about three weeks after CNOOC withdrew its bid for Unocal after opposition by critics who said it might threaten U.S. national security.
Chinese state-owned companies have signed a multibillion-dollar string of deals in recent months to develop oil and gas fields and buy fuel supplies from countries as far-flung as Sudan, Venezuela and Australia.
But this deal would be China's first successful takeover of a foreign-listed energy firm.
The takeover of PetroKazakhstan would add closer economic ties to the growing strategic cooperation between China and Kazakhstan, which is expected to become one of the world's leading oil producers over the next two decades.
China is trying to increase its role in Central Asia, spurred in part by unease at the presence of U.S. military forces in the former Soviet region that borders Afghanistan.
Chinese President Hu Jintao visited Kazakhstan in July and signed an agreement with Kazakh President Nursultan Nazarbayev to develop a "strategic partnership."
The two governments already are partners in the Shanghai Cooperation Organization — a six-nation security group led by Beijing and Moscow that is meant to combat Islamic extremism in Central Asia.
CNPC is China's biggest oil producer and the parent company of PetroChina, whose shares are traded on stock exchanges in Hong Kong and New York.
CNPC says it is the world's 10th-largest oil company in terms of sales, reserves, production and refining capacity.
PetroKazakhstan is based in Canada but all of its operations are in Kazakhstan. It has been involved in joint ventures there since 1991 and bought a state-owned oil company, Yuzhneftegaz, in 1996 in the country's first major oil privatization.
The Canadian company says its proved and probable oil reserves stand at 550 million barrels.
CNPC already holds oil exploration and production licenses in Kazakhstan and is a partner with Kazak state oil company KazMunaiGaz in the construction of a $700 million pipeline to carry Kazakh oil to energy-hungry China.
Kazakhstan exports about 800,000 barrels of oil a day.
The agreement with CNPC requires PetroKazakhstan to pay the Chinese firm $125 million if it accepts any other takeover offers, CNPC said. It said the agreement also would let it match any higher offer.
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