BG Group has agreed to sell half of its interest in the North Caspian Sea production sharing agreement (PSA) – which includes the Kashagan oil development – to Cnooc North Caspian Sea Ltd. for $615 million, payable at completion.
Under the agreement, Cnooc Ltd. will acquire an 8.3% interest in the PSA. Following the sale, BG will retain an 8.3% interest. Completion of the transaction is subject to a number of conditions, including approval from the Kazakhstan authorities and the existing PSA partners waiving pre-emption rights.
The North Caspian Sea PSA includes the Kashagan oil field, the Kalamkas oil discovery, and the Kairan, Aktote, and Kashagan SW prospects, and is operated by ENI, which holds a 16.7% interest. The other partners are ExxonMobil, Shell, and TotalFinaElf, each with 16.7% interest, and ConocoPhillips and Inpex, each with 8.3%.
The effective date of the transaction is Jan. 1, 2003, at which date the net asset value of the interest to be sold was £114 million. The sale is expected to complete during the course of 2003. The North Caspian Sea PSA has yet to begin production, and therefore did not contribute to BG's 2001 or 2002 profits.