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Lakshmi Mittal Enters Kazakh Gas and Oil Market
Mittal Investments, affiliated with Indian magnate Lakshmi Mittal, will acquire 50 percent of Caspian Investment Resources, which has 40 million tons of oil and gas reserves in Kazakhstan, from LUKOIL Overseas, the subsidiary of LUKOIL that owns its foreign assets. The deal is worth about $980 million. In addition, Mittal will take on $160 million (50 percent) of Caspian's debt. The deal is expected to be finalized at the beginning of next year.
Caspian Investment Resources has five deposits in Kazakhstan. They are the Alibekmola and Kozhasai deposits (on parity with Kazmunaigaz), Arman (50 percent, with Shell), Northern Buzachi (50 percent, with the Chinese CNPC) and Karakuduk, which will belong to LUKOIL wholly after its merger with Chapparal resources is complete. The company also has an option to acquire a 25-percent share in the Zhambai Co., which is conducting geological exploration of the Southern Zhambai and Southern Zaburunye deposits, which have total reserves of about 40 million tons.
LUKOIL Overseas characterized the deal as “optimizing the portfolio of assets” and refused to comment further. Head of the LUKOIL investors relations department Gennady Krasovsky told Interfax news agency that the new partner will help LUKOIL enter the Indian market. Analysts doubt the economic expediency of the deal however. A Kommersant source on the Kazakh oil market said that the deal was made at the behest of Kazakh authorities and that the deal could not have been made without their agreement under a 2004 law. RusEnergy analyst Igor Ivakhnenko suggested that the deal was motivated by the desire to contain Chinese influence in the Kazakh energy industry.
Lakshmi Mittal owns the only steel mill in Kazakhstan, Mittal Steel Temirtau, and is one of the largest foreign investors in the country. Mittal is said to enjoy the support of Alexander Mashkevich, head of the Eurasian Industrial Association and one of the country's most influential businessmen. Mittal was subject to harsh criticism by Kazakh politicians after a methane explosion in Mittal Steel Temirtau's Lenin Coal Mine, killing 41.
www.commersant.com
All the Article in Russian as of Dec. 13, 2006
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