KMG EP to buy into Kazakh oilfield for $149 mln

KMG EP to buy into Kazakh oilfield for $149 mlnALMATY, March 11 (Reuters) – KazMunaiGas Exploration Production (KMGq.L: Quote) said on Friday it will spend $149.1 million to acquire a 50 percent stake in Ural Group Ltd, which owns the exploration licence for an oil and gas field in Kazakhstan.

KMG EP, the listed arm of Kazakh state oil and gas company KazMunaiGas, said it would use its own funds to finance a deal comprising $61.3 million for shares and $87.8 million of shareholder loans, repayable when commercial production begins.

Ural Group Ltd owns the exploration licence for the Fedorovsky block near the city of Oral (Uralsk) in northwestern Kazakhstan. The contract expires in May 2014 but can be extended for the production of hydrocarbons, KMG EP said.

“Acquisition of a stake in the block gives us access to a new region, where we intend to develop actively,” KMG EP Chief Executive Kenzhebek Ibrashev said in the statement.

Kazakhstan, the largest economy in Central Asia, holds slightly more than 3 percent of the world’s recoverable oil reserves and is also a significant producer of natural gas.

The Fedorovsky block is traversed by Russian state gas company Gazprom’s (GAZP.MM: Quote) Orenburg-Western Europe gas pipeline and two major oil pipelines also lie within close proximity. KMG EP produced 13.3 million tonnes of crude oil, or 270,000 barrels per day, last year. The company reported a 12 percent increase in net profit last year due to higher oil prices and production. (Reporting by Robin Paxton; Editing by Hans Peters)