CNPC has offered to sell 30-33 percent in PetroKazakhstan to Kazakhstan's government if it drops objections to its $4.18 billion bid for the Canadian firm, two sources familiar with the deal said on Friday.
CNPC, China's national oil firm, has written to the Kazakh government outlining some of the terms of a possible buyout of the PetroKazakhstan stake by Kazakh state oil and gas firm KazMunaiGas, one source told Reuters.
The letter mentioned PetroKazakhstan's Shymkent oil refinery which could be run on a parity basis by CNPC and KazMunaiGas, if the Chinese firm's take-over bid for the Canadian investor went ahead unimpeded by Kazakhstan.
"It is very likely that CNPC, acting through China's government, will make an offer to Kazakhstan allowing the Kazakh government to get at least partial control over the Shymkent refinery through a Kazakh firm, like state oil firm KazMunaiGas," a source said.
"Partial (Kazakh) control of the Shymkent refinery is crucial for the deal to happen."
Kazakhstan's parliament has passed a bill that aims to give the Central Asian state the right to buy foreign-held stakes in oil companies that are put up for sale and seeks to limit property rights over "strategic resources" like oil and gas.
The Kazakh government's opposition to CNPC's offer for PetroKazakhstan, a Calgary-based firm with all its assets in the Central Asian state, burst into the open this week when its energy minister condemned PetroKazakhstan for not informing the government of the deal in advance.
The minister, Vladimir Shkolnik, warned of a "legal collision" if shareholders approved the deal at a meeting on October 18 and if by then President Nursultan Nazarbayev had signed the new bill into law. Most analysts have said they believe Kazakhstan would be unlikely to want to anger its giant neighbour China, with whom it generally has good relations.
Feelings are running high in Kazakhstan because of PetroKazakhstan's ownership of the Shymkent refinery, the best of just three oil refineries in the country.
"It is of paramount importance for Kazakhstan's energy ministry to retain at least partial control over internal fuel prices, to keep them below the average world level and make them affordable for local farmers during sowing and harvesting campaigns," one of the sources said.
Adding to the confusion surrounding CNPC's bid, the official Kazakhstanskaya Pravda daily printed a report saying that the government had already approved the take-over - on the same day Shkolnik told parliament the opposite.
But one source said the newspaper report was a hoax, and the journalist credited with writing the story, Anvar Akhmetov, was fictional. The paper's economics editor declined to comment.
Kazakhstan's economy is booming and the country aims to almost triple oil output to 3.5 million barrels per day by 2015.
Although it is reaping the benefit of high world oil prices, the government remains sensitive to their effect on the domestic market. This week it banned all petrol exports and extended a ban on diesel fuel exports until December 31 this year.
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