China International Trust & Investment Corp (CITIC) Group will purchase the Kazakh oil assets of Canada's Nations Energy Co for US$1.91 billion, boosting the energy deposits of the world's fastest-growing major economy.

The assets being purchased by CITIC, a State-owned investment company, have proven oil reserves of more than 340 million barrels and a current daily output of 50,000 barrels, Nations Energy said in a statement yesterday.

"The acquisition is expected to close in December, although it is still subject to the approval by Nations Energy shareholders, Alberta courts and certain government authorities in Kazakhstan," the Canadian energy firm said.

CITIC Group Assistant President Zhang Jijing said that the company may build a refinery in the Central Asian nation after the completion of the purchase.

The deal follows China National Petroleum Corp's US$4.2 billion purchase of PetroKazakhstan last year.

Kazakhstan has 35 billion barrels of discovered oil reserves and plans to triple its daily output to 3.6 million barrels by 2015, equivalent to about 4 per cent of the world's output last year or a third of Saudi Arabia's production, according to a Bloomberg report.

China's oil consumption is expected to rise 6.4 per cent this year to 7 million barrels a day, the Paris-based International Energy Agency said in its October forecast.

Industry analysts said the CITIC-Nations deal would help address the surging energy demand of China, which imports about 40 per cent of its total oil consumption, while the Kazakh fields that CITIC is purchasing will take advantage of the existing pipeline infrastructure to transport oil to the Chinese market.

State-owned China National Petroleum completed a 962-kilometre crude oil pipeline last December to pump Kazakh oil to the company's refinery in Dushanzi, in Northwest China's Xinjiang Uygur Autonomous Region.

Commenting on the deal, Nations Energy Director David G. Wilson said: "We believe this is a fair price for Nations Energy shareholders and option holders and our board of directors has unanimously agreed to recommend this transaction to our security holders."

CITIC Assistant President Zhang said the purchase is "an important element in the execution of CITIC's oil and gas strategy and is expected to provide the company with a proven base for its overseas energy business expansion strategy."

After the completion of the proposed deal, Zhang said the Beijing-based company will consider building a medium-sized refinery in the Mangistau region of Kazakhstan, and seek Kazakh partners for strategic co-operation in energy resource development and industrial project construction.

Source: China Daily