January 30, 2013 / 2:32 PM / 5 years ago

UPDATE 1-Kazakhstan buys ConocoPhillips stake in offshore oil block

By Dmitry Solovyov

ALMATY, Jan 30 (Reuters) - Kazakhstan, seeking a greater role in large oil projects, has bought a 24.5-percent stake held by ConocoPhillips in the promising offshore oil block Nursultan in the Caspian, as the U.S. firm sheds overseas assets.

Kazakh state oil company KazMunaiGas (KMG) will now own a 75.5-percent stake in the exploration and development project, and Abu Dhabi state investment company Mubadala the remaining 24.5 percent, KMG said in a statement.

The block, located in western Kazakhstan and covering an area of about 8,100 square km, contains an estimated 270 million tonnes of recoverable oil reserves and is expected to start commercial oil output in 2016.

The deep-water field, which is also widely known as Block N, is currently being explored under a subsoil use contract signed by KMG, ConocoPhillips and Mubadala in 2009.

“KMG’s increased participation in the N project demonstrates systematic efforts taken by the national company to strengthen its role in exploration projects in Kazakhstan’s sector of the Caspian Sea,” the company said in a statement.

Kazakhstan, Central Asia’s largest economy and second-largest oil producer after Russia, aspires to boost oil output to 130 million tonnes by the end of this decade. It plans to produce 82 million tonnes this year compared to 79.2 million tonnes in 2012.

ConocoPhillips, which has been shedding its foreign assets to cut debt and increase investment in lower-cost domestic shale oil and gas, has also announced plans to sell its more valuable asset -- an 8.4 percent stake in the mammoth Kashagan offshore field in the Caspian.

Kashagan, the biggest oilfield discovery in over four decades which is expected to start production in the middle of this year, is instrumental in achieving Kazakhstan’s ambitious goal of boosting oil output by 60 percent by 2020.

ConocoPhillips has said it intends to sell its Kashagan stake to ONGC Videsh, the investment arm of India’s Oil and Natural Gas Corp, for about $5 billion.

Kazakhstan, which holds 3 percent of global recoverable oil reserves, has expressed interest in buying the stake and has the right of first refusal on it.

Kashagan holds an estimated 30 billion barrels of oil-in-place, of which 8-12 billion are potentially recoverable.

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