KazMunaiGas seeks to sell 50 pct of Kashagan stake to state fund

July 1. Reuters. Astana

KazMunaiGas seeks to sell 50 pct of Kashagan stake to state fundKazakh state oil company KazMunaiGas (KMG) said on Wednesday it plans to sell 50 percent of its stake in the Kashagan oilfield to the sovereign wealth fund Samruk-Kazyna and use the proceeds to reduce its debt.

KMG holds 16.81 percent in an international consortium which develops Kashagan in the Caspian Sea, the world’s biggest oil find in decades.

The company expects to raise about $4.7 billion through the sale, KMG said in a statement on the Kazakhstan Stock Exchange. The sale is expected to close before the end of this year, it said.

The proceeds will allow the company to reduce its debt relating to the Kashagan project by about $2.2 billion, it said.

KMG’s consolidated net debt was $17.92 billion at the end of 2014.

KMG has asked holders of seven issues of its notes to agree to the deal. It said separate meetings on these debt issues would be held in London on July 27.

After huge delays and cost overrruns, Kashagan finally launched output in September 2013 but halted production a few weeks later after gas leaks were detected in its pipelines.

KMG said it expected Kashagan’s oil production to resume in early 2017.