China National Petroleum Corp (CNPC), the country's largest oil and gas producer, has agreed with Kazakh state oil company Kazmunaigas to jointly purchase Kazakh oil company, JSC Mangistaumunaigas (MMG), for $3.3 billion, according to a statement on CNPC's website.
The purchase includes two oil and gas fields and all MMG's other oil and gas assets, the statement said.
MMG owns licenses to explore and develop 15 oil and natural gas fields in Kazakhstan as well as oil fields in the Caspian region. The company's annual crude output stood at 40 million barrels in 2008, and it had 41.8 billion cu m of natural gas reserve.
The deal is part of a $5 billion loan-for-oil deal that China inked with Kazakhstan earlier this month.
"The transaction is an important step to develop long-term strategic partnership between China and Kazakhstan. It also helps our overseas expansion," CNPC said in the statement.
Kazakhstan has become an important overseas market for CNPC. By the end of 2008, the company had invested $7 billion in the country, according to the CNPC (Kazakhstan) 2008 Sustainable Report.
By the end of last year, 12.54 million tons of crude oil have been transported through the Sino-Kazakhstan oil pipeline. Construction of the natural gas pipeline that crosses the borders of the two countries began in 2008; the pipeline is expected to be operational at the end of 2009, said the report.
In 2005, CNPC acquired PetroKazakhstan (PK) for $4.18 billion, then the largest overseas acquisition ever made by a Chinese company. Today the company's annual crude oil production exceeds 10 million tons, accounting for 16 percent of Kazakhstan's total oil output.
Analysts said China should further boost energy cooperation with central Asian countries to increase its energy security.
China's oil imports are expected to continue to see rapid increases. According to a report by the State Information Center, 55 percent of the country's oil consumption will be met by imports in 2010, and the figure will further rise to 66 percent in 2020.
Analysts said China should further diversify its oil importing sources to find more sustainable supply. At present the Middle East, Africa and Asia-Pacific are China's three main sources of imported oil.