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. Last Updated: 07/27/2016

CNPC Seeking Revenge Against LUKoil

China National Petroleum Corp. has claimed rights to a Kazakh oil field bought by LUKoil as their fight for oil and gas assets in Kazakhstan heats up.

CNPC is claiming pre-emptive rights to buy half the North Buzachi oil field in Kazakhstan from Nelson Resources, Nelson said Friday in a Canadian News Service statement. LUKoil has acquired a 65 percent stake in Nelson, which said that "no such pre-emptive right exists."

"China and Russia will play a significant role in the development of the Kazakh oil resources, and their interests will be represented by CNPC and LUKoil," said Steven Dashevsky, head of research Aton brokerage. "Therefore, it's inevitable that these two companies will have to compromise."

CNPC on Thursday completed its $4.2 billion takeover of PetroKazakhstan, which pumps 12 percent of Kazakhstan's oil. LUKoil made a rival bid for Calgary-based PetroKazakhstan in an effort to block that sale and help protect its right to buy PetroKazakhstan's half of their Turgai Petroleum venture, which accounts for 29 percent of the Canadian company's production.

North Buzachi is located about 180 kilometers north of the Caspian Sea port of Aktau in the Mangistau region, according to Nelson's web site. The field holds an estimated 1.6 billion barrels of oil and produced 10,662 barrels per day in the second quarter of 2005.

"We are aware of this CNPC position and we are in talks with them over this issue," Grigory Volchek, a spokesman at LUKoil Overseas Holding, said by telephone. "So far, there are no legal documents that have been agreed oo." LUKoil is also in talks with Royal Dutch Shell and KazMunaiGaz, the Kazakh state oil company, which also have ventures with Nelson, Volchek said.

CNPC spokesman Liu Weijiang declined to comment.