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. Last Updated: 07/27/2016

CNPC Execs Scurry to Fix Kazakh Deal

SINGAPORE -- Top CNPC executives are in Kazakhstan to smooth the way for the Chinese state oil firm's $4.2 billion takeover deal there, a top CNPC adviser said as Kazakh legislators backed a bill allowing them to intervene in future deals.

China National Petroleum Corp., which has made an agreed takeover offer for Canada-based PetroKazakhstan, is confident it will see the deal through despite the move by Kazakhstan's upper house of parliament, said Tong Xiaoguang, an adviser to CNPC International -- the wholly owned unit of CNPC that is conducting the deal.

"Several of our company's main leaders are gone to Kazakhstan for the PetroKazakhstan takeover deal," said Tong, who is also a former vice president of CNPC International.

Tong reaffirmed by telephone that CNPC had reached an understanding with the Kazakh government on the transaction.

"Before deciding to acquire the company, CNPC communicated with the Kazakh government, and they allowed us to go ahead. As for what is on the mind of the [Kazakh] parliament, I'm not sure," said Tong.

"If the Kazakh government had not given the OK for us to bid for the company, why we would bother to do it to begin with?" he asked.

Tong stressed that he was not directly involved in the PetroKazakhstan deal, but has been briefed by the CNPC team handling the acquisition.

Kazakhstan has intervened in oil deals on its territory in the past, pouncing on the sale of a big stake in the Kashagan development in 2003 and buying it for itself.

The bill passed on Wednesday will allow Kazakhstan to intervene whenever foreign firms seek to sell their interests in Kazakh oil companies. It will also limit property rights in "strategic resources" like oil and gas assets in the country.

It now needs President Nursultan Nazarbayev's signature to become law.

Kazakhstan's energy minister warned of a "legal collision" with PetroKazakhstan if its shareholders approved a $4.18 billion deal to sell the firm to China's CNPC.

"If by [the shareholders' meeting on Oct. 18] our law has been adopted there's going to be a legal collision and we will be able to say, sorry guys... you have concluded your deal without our consent while we have a pre-emption right," said Energy and Mineral Resources Minister Vladimir Shkolnik.

Some observers see the rumblings from Kazakh officials as a reference to control of the Shymkent oil refinery owned by PetroKazakhstan, one of only three refineries in the vast ex-Soviet state, which many lawmakers would like returned to state control.