China's CITIC Group. Photo Gallery >>>

    BEIJING, Dec. 31 (Xinhua) -- China's CITIC Group announced on Sunday that it has successfully acquired the Kazakhstan oil assets of Canada's Nations Energy Company Ltd. for 1.91 billion U.S. dollars.

    It is the third largest overseas oil acquisition made by a Chinese company.

    CITIC has acquired 100-percent ownership of Nations Energy, after the Canadian company sold its non-Kazakhstan assets under an agreement signed in October.

    The acquisition allows CITIC to develop the Karazhanbas oil and gas field in Mangistau Oblast until 2020. It has proven reserves in excess of 340 million barrels of oil and produces more than 50,000 barrels a day.

    Under the approval of the Kazakhstan regulatory authorities for the acquisition, CITIC has granted KazMunaiGas (KMG), the state-owned oil company of the Republic of Kazakhstan, an option under to buy 50 percent of Nations Energy.

    The option is exercisable within one year and the price is based on CITIC's acquisition price.

    Nations Energy's Kazakhstan oil assets include the wholly owned Argymak Trans Service LLP, which provides transport services, and Tulpar Munai Services LLP, providing drilling and training services.

    CITIC said in October that it planned to buy Nations Energy's Kazakhstan oil assets for 1.91 billion US dollars.

    "We will focus on cooperating with Nations Energy's current oil customers, suppliers and partners, and there are no clear plans to sell oil to China," said an insider, who would only give his surname Lu.

    The deal would help CITIC develop its petroleum and natural gas business, said Kong Dan, chairman of the CITIC Group.

    "It will provide CITIC with an important base from which it can expand its energy business in Kazakhstan, the most important petroleum producer in Central Asia," Kong said.

    He said the takeover was a good opportunity for CITIC to diversify its investments and business in Kazakhstan.

    CITIC said earlier that it was planning a feasibility study on developing local oil refining and was looking for partners in other sectors such as construction and financing.

    Established by late Chinese Vice President Rong Yiren, CITIC is a transnational conglomerate involved in finance, energy, industrial investment, information technology, real estate, and service industries.

    Growing overseas operations and China's rising demand for energy have prompted domestic enterprises to search for overseas oil assets.

    China National Petroleum Corporation (CNPC), China's largest oil producer, closed its acquisition of Canada-based Petro Kazakhstan Inc. (PK) for 4.18 billion U.S. dollars on Oct. 27 last year. It remains the largest overseas takeover transaction ever made by a Chinese company.

    The deal was considered an important step for China to diversify its overseas oil business by turning from traditional partners in the Middle East and Africa to Central Asia.

    In April, China National Offshore Oil Company Limited (CNOOC Ltd.), the country's leading offshore oil producer, acquired a 45-percent working interest in an offshore oil field in Nigeria, for 2.69 billion U.S. dollars.

    According the National Bureau of Statistics, China produced 168.42 million tons of crude oil in the first 11 months, up 1.6 percent from the same period a year ago.

    Data from the General Administration of Customs shows China's imports of crude oil rose by 15.6 percent to 133.6 million tons in the first 11 months, and oil products, up 21.1 percent to 34.24 million tons.

    China imported 118.75 million tons of crude oil and 17.42 million tons of oil products in 2005, with the dependency rate on imported oil reaching 42.9 percent.  

    Related stories:

   CITIC to acquire Kazakhstan oil assets from Canada's Nations Energy