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China enters the world's largest oil discovery in 50 years

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Staff writer ▼ | September 9, 2013
Kashagan oil projectChinese President Xi Jinping struck a deal with Kazakhstan giving China a stake in the Kashagan oil project. The $5 billion deal increases China's presence in Central Asia and blocks India to get a stake in the world's largest oil discovery in 50 years.

"The two countries have agreed on China's shareholding in the development of the Kashagan deposit. The two governments hail and support this agreement," Mr. Xi told a news briefing after talks with Kazakh President Nursultan Nazarbayev.

Oil and gas deals, including on building an oil refinery in Kazakhstan, are among 22 agreements worth some $30 billion reached during Mr. Xi's visit, Mr. Nazarbayev said. Under the Kashagan deal, Kazakhstan will sell 8.33 percent of the offshore oilfield in the Caspian Sea to China for about $5 billion.

The sale and purchase agreement was signed by the heads of Kazakh state oil and gas company KazMunaiGas and China National Petroleum Corp (CNPC). CNPC will also pay up to $3 billion to cover half of Kazakhstan's financing of the second phase of Kashagan's development, KazMunaiGas head Sauat Mynbayev told reporters. This phase is expected to start after 2020.

The transaction is expected to be closed by late September or late October.

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