China Petroleum & Chemical Corp, also known as Sinopec, has agreed to purchase a 50 percent stake in Caspian Investment Resources Ltd. from Russia’s OAO Lukoil for $1.2 billion. After acquiring half of the oil and gas producer in 2010, Sinopec now owns all of Caspian Investments’ assets, which include four oil and gas projects in Kazakhstan. In 2013, Lukoil’s share of that production was 28,000 barrels a day.

Sinopec is not the only Chinese oil company interested in Kazakh oil. Sinopec’s main competitor, China National Petroleum Corp, purchased an 8.3 percent stake in a Caspian Sea oilfield in September 2013 for $5 billion.

Kazakhstan currently holds 3 percent of the world’s recoverable oil reserves. Altogether, Kazakhstan produces around 1.7 million barrels of oil per day with 240,000 of these going to China. While much of this flows through pipelines directly connected with China, oil from the Caspian Investment fields—most of which are in western Kazakhstan—will have to first travel through European pipelines before going to China.

Posted by Catherine Matacic