Shell Might Block Chinese Participation in Caspian Project

Shell could exercise its pre-emptive rights and prevent China from participating in the Caspian Sea project offshore Kazakhstan. "We are considering our position -- including the pre-emption option," Shell spokesman Nick Wood said. CNOOC and Sinopec are both controlled by the Chinese Government and each plan to acquire an 8.33% stake in the North Caspian Sea Production Sharing Agreement from BG Group. Shell, as an existing partner with a 16.67% stake, can pre-empt the deal and purchase the interests itself. The other partners each have this same pre-emptive option.

A CNOOC spokesman said he was unaware of Shell's plans and declined to comment on the pre-emptive positions of the other stakeholders. Sinopec and CNOOC agreed earlier this year to each pay BG $615 million for the respective stakes. The deadline for Shell to exercise its pre-emptive rights is May 9 for the CNOOC deal and May 17 for Sinopec's deal.

The Kazakh project includes the Kashagan field, which covers about 2,162 square miles and has estimated recoverable reserves of up to 13 billion boe. The other partners, ENI Agip, ExxonMobil and TotalFinaElf, each hold a 16.67% interest, and ConocoPhillips and Inpex each hold 8.33%.