Energy hungry China: China inks oil deal with Kazakhstan
Energy hungry China has signed a loan for oil deal with neighbouring Kazakhstan, which will get $10 billion for financing oil and other projects. This is the four deal signed by China since February offering loans and investments totaling $46 billion to four countries in exchange for oil.
The latest deal involves a $5 billion loan to be given by the state-owned China National Petroleum Corp to Kazakhstan’s KazMunaiGaz EP for the joint purchase of MangistauMunaiGaz, which owns oil and gas fields. China, which has been wooing Kazakhstan at the political level for the past few years, will invest another $5 billion in other projects in the country.
The Kazak pact follows deals signed by China with oil producing Russia, Venezuela and Brazil over the past two months. Last February, China offered to buy 300,000 barrels of Russian oil per day for 20 years in exchange for $25 billion in loans. Brazil also agreed to supply 100 million barrels of crude to China in exchange for loans of up to $10 billion.
Another oil producing country, Venezuela, recently accepted a Chinese offer of $6 billion for financing oil projects while promising to triple oil supplies to one million barrels per day to China by 2015.
The four agreements showed China was making long term plans for energy supplies by leveraging on its vast foreign exchange reserves of $2 trillion.
The agreement follows the recent visit to Beijing by Nursultan Nazarbayev, the Kazak president. China has given Kazakhstan an important role in international affairs by encouraging it to be an active participant in meetings of the Shanghai Cooperation Organisation. India and Pakistan have the status of observers in SCO. Russia, China and four central Asian countries are full members.
KazMunaiGaz had earlier said it was in talks with the CNPC for selling 49% of MangistauMunaiGaz. But the Chinese government did not give details of the deal after it was signed on Friday. MangistauMunaiGaz has reserves estimated at 500 million barrels.
Kazakhstan has an oil pipeline to China. But most of its oil supplies have so far been going across Russia to Western buyers. China imported 42 million barrels of Kazak oil through the pipeline last year.
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