China and India vying for Canadian Oil Co in Kazakhstan
By agencies   |   Wednesday, 17 August 2005, 19:30 IST
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HONG KONG: State-owned oil companies in China and India are trying to buy a Canadian company with oil fields in Kazakhstan in the most direct competition yet for energy between Asia's two most populous countries. A joint venture of China National Petroleum, China's biggest oil company, and PetroChina, its publicly traded subsidiary, offered roughly $3.2 billion late Monday for PetroKazakhstan, a person close to the negotiations said. Oil & Natural Gas, India's main government oil company, has already reportedly submitted a bid of $3.6 billion in cooperation with the steel maker Mittal Group. PetroKazakhstan, whose shares are traded in Toronto, issued a statement from its headquarters in Calgary, Alberta, after the close of trading saying it had received proposals to acquire the entire company. The company announced in June that it had been approached, and investment bankers had identified the two companies as interested. While the Chinese bid appeared to be lower than the Indian bid, Chevron's successful pursuit of Unocal this summer despite a higher bid from China National Offshore Oil Corp. has shown that the higher bid does not always win in a politically charged industry like energy. China National Petroleum already has substantial oil investments of its own in Kazakhstan and has been trying to build a pipeline to carry the oil to China. The Chinese government has been actively courting Kazakhstan as well, partly because Beijing officials want to make sure that no Muslim insurgency develops in heavily Muslim areas of Xinjiang Province near the Kazakh border. PetroKazakhstan has been locked in disputes with the Kazakh government over its flaring, or controlled burning, of natural gas and over other issues, disputes that China's alliance with Kazakhstan might be able to smooth over. An Indian buyer of PetroKazakhstan would face a more difficult challenge in exporting oil from Kazakhstan, which does not have a border with India. The rival attempts to buy PetroKazakhstan underline the competition between China and India for oil, even though officials in both countries have called repeatedly for cooperation. India's oil imports rose 11 percent last year, while China's soared 33 percent, although part of China's increase reflected stockpiling.

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