CITIC buys oil company stake for $1.91B

China, which is aggressively seeking overseas energy assets to fuel its booming economy, said Sunday that one of its biggest conglomerates has bought the Kazakhstan oil assets of a Canadian company for $1.91 billion.

China’s CITIC Group bought the oil assets of Canada’s Nations Energy Company Ltd. and granted KazMunaiGas, Kazakhstan’s state-owned oil company, an option to a 50 percent interest in Nations Energy, the official Xinhua Agency said.

CITI’s bid for Nations Energy’s Karazhanbas oil field had been opposed by some in the former Soviet Central Asian republic, and the option for KMG may have been one way to win approval from Kazakhstan’s regulatory authorities.

China’s economy has seen double-digit growth in recent years, accompanied by increased demand for energy assets to improve its energy security. Kazakhstan possesses the largest oil deposits in the Caspian Sea region and produces about 1.3 million barrels a day.

In November, Kazakhstan’s oil minister said he was against the CITIC Group deal.

“We must take extreme measures to stop the agreement on the Karazhanbas,” Baktykozha Izmukhambetov said in televised remarks, referring to an oil field that is the biggest asset of Canada-based Nations Energy Co. in the Central Asian nation.

But according to Xinhua, as part of the approval from Kazakhstan’s regulatory authorities, KMG was given the option, exercisable within a year at a price based on CITIC’s purchase price for Nations Energy.

CITIC Group is one of China’s biggest conglomerates. It was set up in Hong Kong in 1979 by former Vice President Rong Yiren as the government’s main overseas investment arm.

The Karazhanbas field in western Kazakhstan has proven reserves of more than 340 million barrels of oil, and current production exceeds 50,000 barrels per day.

CITIC, which has significant infrastructure investments in Central Asia, is planning to build a medium-sized refinery at Karazhanbas, Zhang Jijing, a CITIC Group director, said in October.