China invests US$5 billion in giant Kazakh oil project

Kashagan is the world's largest oil discovery in 50 years.

China has entered into a deal with Kazakhstan giving the former a stake in Kazakhstan’s giant Kashagan oil project. Under the Kashagan deal, Kazakhstan will sell 8.33% of the offshore oilfield in the Caspian Sea to China for about US$5 billion.

The sale and purchase agreement was signed by the heads of Kazakh state oil and gas company, KazMunaiGas, and China National Petroleum Corporation.

CNPC will pay US$3 billion to cover half of Kazakhstan's financing of the second phase of Kashagan's development. This phase is expected to start after 2020.

Oil and gas deals, including China’s building an oil refinery in Kazakhstan, were among 22 agreements worth some US$30 billion reached during Chinese President Xi Jinping’s visit to Kazakhstan last week.

Xi said that both countries have agreed on China's shareholding in the development of the Kashagan deposit

Kazakh officials said the transaction will be closed by late September or late October.

During Kashagan's development, production will be gradually increased to 370,000 barrels per day in the second stage from 180,000 bpd in the first stage in 2013-14.