A bidding war between energy giants from Asia's two largest countries is on the brink following the submission of a $3.2 billion bid by Chinese joint venture China National Petroleum Corporation and PetroChina for PetroKazakhstan.
The offer from PetroChina and China National Petroleum Corporation, China’s biggest oil company, comes as a rival to an already tabled bid of $3.6 billion from Indian consortium The Oil and Natural Gas Corporation, India’s main state-owned oil company, and steel maker Mittal Group.
Although the Chinese bid is unconventional, in that it is lower in value than an already issued offer, it reflects the stronger geographical and political position the Chinese hold. China has a border with Kazakhstan, while India does not, meaning that a successful Indian bid would probably have to include using pipelines in Russia, which the former Soviet state of Kazakhstan would not favor. Furthermore, China already has a good diplomatic relationship with its neighbor.
However, with both India and China keen to secure new sources of fossil fuels to feed their respective nations’ increasing thirst for energy, a bidding war could be on the cards before Canadian owned PetroKazakhstan’s fate is sealed.
The successful bidder will acquire 550 million barrels of proved and probable crude oil reserves, located in the South Turgai Basin in south-central Kazakhstan.