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BG’s oil asset sale faces new threat

The Times: BG’s oil asset sale faces new threat

By Peter Klinger

June 12, 2004

KAZAKHSTAN is threatening to derail the $1.23 billion (£670 million) sale of BG Group’s Caspian Sea oil assets to a consortium that includes Royal/Dutch Shell.

The Kazakhstan Government has stunned the seven partners in the North Caspian Sea Production Sharing Agreement (NCSPSA), covering the Kashagan oilfield, by claiming it has a pre-emptive right to acquire BG’s 16.7 per cent stake.

BG sold the stake to five of the NCSPSA members last September. The company said yesterday that it had only recently been informed that Kazakhstan intended to scupper the deal and buy the stake itself.

The move, marks the second time that disagreement over pre-emptive rights has been used to undermine BG’s efforts to sell its stake.

BG had initially signed agreements to sell its interest in the oilfield, one of the largest discoveries in decades, to two Chinese companies, CNOOC and China Petrochemical Group.

But that agreement, struck in March last year, was overtaken two months later when BG’s NCSPSA partners, led by Shell, Total and ExxonMobil, used their pre-emptive rights to push out the Chinese bid.

BG said Kazakhstan was prepared to match the $1.23 billion price tag. A company spokeswoman said that the change of buyer of its NCSPSA stake would not affect BG financially.

Shell said in a statement: “Shell, along with other partners, had previously exercised its pre-emptive rights under the NCSPSA. We continue to work with BG, other partners and the government to resolve the issue.”

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