PetroKazakhstan
Encyclopedia
PetroKazakhstan is a Canadian oil company, based in Calgary
, that has all of its business focused on Kazakhstan
where it had some 550 Moilbbl of oil and 25 Gcuft of natural gas
reserves (January 2005 estimate) in the Turgai basin region. These are the second largest Kazakhstani proven reserves after ChevronTexaco's TengizChevroil
. Estimated production is 165000 barrels (26,232.9 m³) of oil
per day. In 2005, PetroKazakhstan was acquired by China National Petroleum Corporation
and then in 2006 transferred to PetroChina
.
In 1996 it purchased Yuzhneftegaz from the Kazakh government, making it one of the largest players in the country.
However the company ran into severe problems in the late 1990s. All the company's oil went through refineries
owned by Central Asian Industrial Holdings N.V. (CAIH), a Dutch-registered offshore affiliate of Kazkommertsbank
(KKB) Kazakhstan's leading banking group, which used their monopoly to charge high prices. At the same time oil prices plunged. In 1999 the company was forced into receivership
and almost broken up.
The company was saved by Bernard Isautier, a board member who had long been involved in the Canadian oil industry and in Central Asia. He became CEO and negotiated a merger with Central Asian Industrial Holdings N.V. From mid-October 1999 to 2000 Hurricane acquired 88.4% of OJSC Shymkentnefteorgsintez (now PetroKazakhstan Oil Products LLP) which owns the 160,000 bpd
Shymkent Oil Refinery, the most modern of the country's three refineries (commissioned 1985). In doing so Isautier put 30% of Hurricane's stock in CAIH's hands. This eventually made the investors in both companies very wealthy, especially Isautier who had demanded no salary and was at first only paid in stock options. The rapid increase in the stock's value made Isautier by far the most generously compensated executive in Canada in 2004.
In the following years Hurricane/PetroKazakhstan saw considerable conflict with the government of Kazakhstan, including a fine for anti-competitive behaviour and protests of its environmental and labour record reportedly organized by government agents. In June 2005 PetroKazakhstan announced that it had been approached for a possible takeover or merger, sending stock prices up significantly. The most frequently mentioned possible suitor was a branch of India's ONGC. The stock quickly fell back down when the government of Kazakhstan announced that it would demand the right to acquire PetroKazakhstan prior to any merger, in part because India
would have to export their oil through Russia
, thus increasing Kazakhstan’s dependence on Russia.
(CNPC), agreed to buy the company for US$4.18 billion via CNPC International Ltd. (CNPCI), a 100% subsidiary of China National Oil & Gas Exploration and Development Corp. (CNODC). This made the PetroKazakhstan deal the largest overseas acquisition by a Chinese company. PetroKazakhstan was delisted in Kazakhstan, Toronto, New York, London and Frankfurt Stock Exchanges.
As part of the deal with CNPC, on 15 October 2005, according to the Law of the Republic of Kazakhstan On Subsoil Use, CNPC agreed to sell back 33% of the shares of PetroKazakhstan Inc. to KazMunaiGas (KMG), a transaction which was completed on 5 July 2006. Further on 6 July 2007 KMG bought back a 50% share in PetroKazakhstan subsidiary PetroKazakhstan Oil Products LLP [PKOP) thereby allowing the Kazakh government to regain an equal share of the nation's most modern oil refinery.
In 2006 CNPC transferred its remaining 67% of shares to CNCPE&D, a 50/50 JV
with its own listed subsidiary PetroChina
, who currently manage and operate the company.
Calgary
Calgary is a city in the Province of Alberta, Canada. It is located in the south of the province, in an area of foothills and prairie, approximately east of the front ranges of the Canadian Rockies...
, that has all of its business focused on Kazakhstan
Kazakhstan
Kazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...
where it had some 550 Moilbbl of oil and 25 Gcuft of natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
reserves (January 2005 estimate) in the Turgai basin region. These are the second largest Kazakhstani proven reserves after ChevronTexaco's TengizChevroil
TengizChevroil
Tengizchevroil is a joint venture between Chevron , ExxonMobil , KazMunayGas and LukArco...
. Estimated production is 165000 barrels (26,232.9 m³) of oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
per day. In 2005, PetroKazakhstan was acquired by China National Petroleum Corporation
China National Petroleum Corporation
China National Petroleum Corporation is a state-owned fuel-producing corporation and the largest integrated oil and gas company in the People's Republic of China...
and then in 2006 transferred to PetroChina
PetroChina
PetroChina Company Limited is a Chinese oil company and is the listed arm of state-owned China National Petroleum Corporation , headquartered in Dongcheng District, Beijing. It is China's biggest oil producer, and was the world's most valuable company by market value as of September 28th 2010...
.
Origins - Hurricane
Formerly known as Hurricane Hydrocarbons Ltd. the company was founded in 1981 and initially operated in Western Canada. It changed to a more international focus and grew after making several major oil and gas finds in Southern Kazakhstan, in 1991 becoming a partner in a JV to develop the Kyzylkiya, Aryskum, Maibulak and South Kumkol fields.In 1996 it purchased Yuzhneftegaz from the Kazakh government, making it one of the largest players in the country.
However the company ran into severe problems in the late 1990s. All the company's oil went through refineries
Oil refinery
An oil refinery or petroleum refinery is an industrial process plant where crude oil is processed and refined into more useful petroleum products, such as gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas...
owned by Central Asian Industrial Holdings N.V. (CAIH), a Dutch-registered offshore affiliate of Kazkommertsbank
Kazkommertsbank
Kazkommertsbank is the largest private bank in Kazakhstan with a total market share of 24%.-About:Kazkommertsbank is a large provider of banking services and other financial products to large and medium-sized corporations in all sectors of Kazakh economy....
(KKB) Kazakhstan's leading banking group, which used their monopoly to charge high prices. At the same time oil prices plunged. In 1999 the company was forced into receivership
Receivership
In law, receivership is the situation in which an institution or enterprise is being held by a receiver, a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights." The receivership remedy is an equitable remedy that emerged in...
and almost broken up.
The company was saved by Bernard Isautier, a board member who had long been involved in the Canadian oil industry and in Central Asia. He became CEO and negotiated a merger with Central Asian Industrial Holdings N.V. From mid-October 1999 to 2000 Hurricane acquired 88.4% of OJSC Shymkentnefteorgsintez (now PetroKazakhstan Oil Products LLP) which owns the 160,000 bpd
BPD
BPD may refer to:*BPD , British cyclecar manufactured in 1913;*Banco Popular Dominicano, the third major private bank in the Dominican Republic;...
Shymkent Oil Refinery, the most modern of the country's three refineries (commissioned 1985). In doing so Isautier put 30% of Hurricane's stock in CAIH's hands. This eventually made the investors in both companies very wealthy, especially Isautier who had demanded no salary and was at first only paid in stock options. The rapid increase in the stock's value made Isautier by far the most generously compensated executive in Canada in 2004.
renamed PetroKazakhstan
In 2003 Hurricane was renamed PetroKazakhstan to reflect that its entire operations are in that country.In the following years Hurricane/PetroKazakhstan saw considerable conflict with the government of Kazakhstan, including a fine for anti-competitive behaviour and protests of its environmental and labour record reportedly organized by government agents. In June 2005 PetroKazakhstan announced that it had been approached for a possible takeover or merger, sending stock prices up significantly. The most frequently mentioned possible suitor was a branch of India's ONGC. The stock quickly fell back down when the government of Kazakhstan announced that it would demand the right to acquire PetroKazakhstan prior to any merger, in part because India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
would have to export their oil through Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, thus increasing Kazakhstan’s dependence on Russia.
CNPC and PetroChina
On 21 August 2005 China National Petroleum CorporationChina National Petroleum Corporation
China National Petroleum Corporation is a state-owned fuel-producing corporation and the largest integrated oil and gas company in the People's Republic of China...
(CNPC), agreed to buy the company for US$4.18 billion via CNPC International Ltd. (CNPCI), a 100% subsidiary of China National Oil & Gas Exploration and Development Corp. (CNODC). This made the PetroKazakhstan deal the largest overseas acquisition by a Chinese company. PetroKazakhstan was delisted in Kazakhstan, Toronto, New York, London and Frankfurt Stock Exchanges.
As part of the deal with CNPC, on 15 October 2005, according to the Law of the Republic of Kazakhstan On Subsoil Use, CNPC agreed to sell back 33% of the shares of PetroKazakhstan Inc. to KazMunaiGas (KMG), a transaction which was completed on 5 July 2006. Further on 6 July 2007 KMG bought back a 50% share in PetroKazakhstan subsidiary PetroKazakhstan Oil Products LLP [PKOP) thereby allowing the Kazakh government to regain an equal share of the nation's most modern oil refinery.
In 2006 CNPC transferred its remaining 67% of shares to CNCPE&D, a 50/50 JV
JV
JV can mean:*Bearskin Airlines IATA airline designator*Jack Valenti, the former head of the Motion Picture Association of America*Jaclyn Victor, the first Malaysian Idol winner*John Virgo, a snooker player and commentator...
with its own listed subsidiary PetroChina
PetroChina
PetroChina Company Limited is a Chinese oil company and is the listed arm of state-owned China National Petroleum Corporation , headquartered in Dongcheng District, Beijing. It is China's biggest oil producer, and was the world's most valuable company by market value as of September 28th 2010...
, who currently manage and operate the company.
See also
- Shanghai Cooperation OrganizationShanghai Cooperation OrganizationThe Shanghai Cooperation Organisation or SCO , is an intergovernmental mutual-security organisation which was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan...
- of which Kazkhastan and China are both members