CNPC Clears Final Hurdles to PetroKazakhstan Acquisition
China National Petroleum Corporation's (CNPC) acquisition of PetroKazakhstan Inc. (PK), through its wholly-owned subsidiary CNPC International (CNPCI), was successfully concluded today, after receiving formal approval from the Court of Queen's Bench, in Calgary, Alberta, yesterday.
On October 18, 2005, PK shareholders and proxy holders voted 99.04% in favour of the transaction, clearing the way for CNPC to acquire 100% of the assets of PK for US 55$ per share.
CNCP and PK announced an "Arrangement Agreement" outlining the proposed transaction on August 22nd 2005. After two months of intense work, all formal approvals and legal procedures have now been obtained and completed. CNPC staff are ready to begin working with PK on the hand-over of business operations. During the transition period, the operations of PK will continue as usual and PK employees in Kazakhstan will be unaffected.
Since its first foray into Kazakhstan in 1997, CNPC, China's largest oil and gas producer and supplier, has strictly followed local laws and regulations as well as international best practices for the industry. CNPC continues to fulfill that commitment through the application of advanced and proven technologies.
CNPC has developed good relationships with the Kazakhstan government. The cooperative Aktobe project was hailed by Kazakh President Nazarbayev as the "Model for Sino-Kazakhstan Economic Co-operation". Upon acquisition, and in keeping with these good relations, CNPC will cooperate with KazMunaiGaz on the operations and management of PetroKazakhstan. Both parties have come to an understanding and have signed an MOU.
The MOU outlines an agreement whereby CNPC will sell 33% of the PK assets for US$1.4 billion (US$55 per share) and also agrees to set up a joint venture for the operation of the Shymkent Oil Refinery.
PetroKazakhstan owns 12 oil fields and exploration licenses in 6 blocks in Kazakhstan, with great exploration potential. CNPC's strength in capital, technology and management, as well as experience in Kazakhstan, will be leveraged to increase the production capacity of PK and provide a reliable supply to the Sino-Kazakhstan pipeline to be completed by year end. The increased investment in oil and gas in Kazakhstan and the acceleration of PK's development will play an active role in ensuring a stable supply of oil products in Kazakhstan, and in promoting local economic development.
The success of CNPC's acquisition of PK marks a milestone of CNPC's
international development strategy, and ushers in a new era of cooperation between China and Kazakhstan in the oil and gas sector.
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