(Reuters, Dec 30) China's CITIC Group said on Sunday it had completed its acquisition of the Kazakhstan oil assets of Canada-based Nations Energy for $1.9 billion.

China International Trust and Investment Corp. (CITIC), a diversified Chinese state-owned investment vehicle with few oil interests, announced the deal on October 26 and said it expected to close it in December pending shareholder approval.

Trade between Kazakhstan and China has grown following the collapse of the Soviet Union but Kazakhstan remains wary of becoming merely a raw materials supplier to its giant neighbor.

"The acquisition is a strategic step for CITIC in developing its business of energy and resources," investment group CITIC said in a statement.

Nations Energy's 94.6 percent subsidiary, JSC Karazhanbasmunai, holds 100 percent of the mineral rights to develop the Karazhanbas Oil and Gas Field in Mangistau Oblast until 2020, with proved reserves of more than 340 million barrels of oil and current production of over 50,000 barrels per day.

Karazhanbasmunai is the unit of Nations Energy that operates the Karazhanbas oilfield in western Kazakhstan.

"Pursuant to the approval received from the Kazakhstan regulatory authorities for CITIC's acquisition, CITIC has granted to KazMunaiGas (state-owned oil company) a call option under which KMG may acquire a 50 percent interest in Nations Energy, exercisable within a one-year period," CITIC said in the statement.

Some members of Kazakhstan's parliament had expressed concern over the CITIC deal for fear that China, the world's second largest oil consumer, may be gaining too much influence over the country's energy resources.

China's drive to acquire energy assets had already brought it to Kazakhstan, where last year China National Petroleum Corp. bought another Canadian firm, Petrokazakhstan, for $4.2 billion.

CITIC Group is the state-owned parent of Hong Kong-listed CITIC Resources Holdings Ltd (1205.HK: Quote).

source:Reuters