Kazakh government expects oil boom once troubled Kashagan oil field resumes operations. Photo courtesy North Caspian Operating Co.
MOSCOW, Aug. 21 (UPI) -- Russia's Lukoil said it sold its stake in a Kazakh oil producer to a rival in Beijing just as China's economy falters and Kazakhstan's gets a $1 billion loan.
The Russian company said it sold its 50 percent in oil producer Caspian Investments Resources to Sinopec, a rival company based in China, for $1 billion, giving the Chinese oil company full control.
The Caspian producer plays a role in the development of five separate fields in Kazakhstan. Lukoil said cumulative production since 2006 has amounted to 95 million barrels of crude oil and around 1 billion cubic feet of natural gas.
The investment from Sinopec comes amid a slowdown in the Chinese economy. To stave off declines, the Chinese government devalued the national currency. This week, the People's Bank of China pumped $18 billion into the markets in an effort to reverse downward momentum after the Shanghai Composite Index closed down more than 6 percent.
Kazakhstan, meanwhile, expects a major lift in oil production with the planned restart of operations at its giant Kashagan oil field in the Caspian Sea. Production was halted in October 2013, less than a month after it started, when a pipeline associated with the field cracked open. Production is expected to reach 630 million barrels in 2017 and 760 million barrels in 2020.
The Asian Development Bank said Friday it approved a $1 billion loan to help Kazakhstan strengthen its economy. Lotte Schou-Zibell, ADB's chief regional economist, said the loan will give the country "fiscal leeway" to balance against the negative impacts of the low price of crude oil.
"It will help the government modernize infrastructure and maintain spending programs for job creation, social services, support to low-income households, and private sector development, particularly for small businesses," Schou-Zibell said in a statement.
Lukoil maintains a role in two other oil fields in Kazakhstan and is a member of the Caspian Pipeline Consortium. The company remains the largest single Russian investor in the country.