KazMunayGas (KMG) and China Energy Company Limited (CEFC) signed Friday, April 29, the documents for setting up a joint venture in which the company from Kazakhstan will own a 49% stake, according to representatives of KMG. Thus, KMG International (KMGI), former Rompetrol Group, is transferred under the control of the Chinese company. It is expected the transaction will be completed by October, 2016.
CEFC will pay 680 million dollars for the purchase of 51% stake in KMGI and the Chinese company representatives say that at least 3 billion dollars will be invested over the next five years. KazMunayGas will continue to deliver crude oil for processing by refineries owned by KMGI in the next 15 years, states a company press release.
“China CEFC will acquire 51% stake in Rompetrol for 680 million dollars, after which the two parties will integrate their resources for a joint exploration of international markets of oil and gas. They will also make strategic investments in the energy sector through KMGI, will create an investment energy fund, will purchase more gas stations globally (…). In the next five years, at least 3 billion dollars will be invested in projects in line with the company’s strategic targets. KMGI will continue to receive support from the Kazakh Government and KMG, the latter promising to provide at least 125 million tons of crude oil for the next 15 years after the KMGI purchase”, says a document published by the Chinese company.
Late last year the two companies signed a Memorandum of Understanding, part of broader trade agreements signed by the political leaders of Kazakhstan and China in the energy and telecommunications worth over 4 billion dollars.
According to the agreement, the Chinese company assumes a number of obligations, such as investments to develop new projects in the European Union and the countries along the route of the Silk Road, an initiative involving the development of an integrated value chain from China to Central and Western Europe. The projects to be developed will be based on the assets and operations coordinated in Europe by KMGI.
“I am convinced that in alliance with such a strong investor we can make a major breakthrough in this direction using KMGI as a joint platform for business development”, stated the Chairman of KMG.
“The cooperation between CEFC and KMG is based on the strategic development objective, which will make KMGI a joint platform for both parties to achieve resources and performing strategy investment. We believe it will be a win-win cooperation for us to build a long term strategic partnership”, asserted the Chief Executive Officer of CEFC.
CEFC, established in 2002, is one of the most dynamically developing private companies in China. In 2014 the company registered revenues of over 35 billion dollars, entered the list of Global Fortune 500 (was ranked 349) and was seen as one of the most influential Chinese-based energy companies. CEFC carries out its activity in energy, financial and investment industries, and has a staff of over 20.000.
In September 2015 purchased Dyneff, a fuel distribution company owned by KMGI in Western Europe and doing business in France and Spain. În December 2015 and March 2016 took over three oil blocks in the African nation of Chad and acquired a financial services company, J & T Finance Group SE, active in the Czech Republic and Slovakia.
KMG International (former Rompetrol Group NV) was acquired by KMG in 2007. The company owns two refineries in Romania, as well as a network of filling stations in the EU countries. In accordance with the Decree of the Government of the Republic of Kazakhstan from the 30th of December, 2015, KMGI was included in the list of companies subject to privatization.