Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

LUKoil Sure of Success in Kazakhstan

For MTAndrei Kuzyayev
LUKoil said on Thursday that it expected to secure the 75 percent of votes from Nelson Resources shareholders in December it needs to complete the purchase of the Toronto-listed Kazakh oil firm.

"We are confident we will collect the needed number of votes under any method of votes calculation," the head of LUKoil's overseas arm, Andrei Kuzyayev, told reporters.

Last week, LUKoil bought 65 percent of Nelson, mainly from Nelson's Kazakh directors, despite opposition from some minority shareholders who criticized the $2 billion takeover for being struck at prices below market value.

Nelson shareholders will meet on Dec. 2 to vote on the purchase, and 75 percent support is needed to approve the deal, which would be Russia's biggest acquisition abroad to date.

"We believe that we are acting fully in line with international practice and in the interests of all shareholders, who have been given equal rights," said Kuzyayev.

He reiterated LUKoil was offering $2.19 per share to minority shareholders, the same price it paid to majority owners, but said the company would start buying shares only after the extraordinary general meeting votes in support of the deal.

The company plans to spend as much as $700 million during the next five years to increase production at Nelson.

Nelson has stakes in four projects in Kazakhstan and options to buy 25 percent stakes in two offshore blocks in the Caspian Sea, Kuzyayev said.

LUKoil is seeking to expand into nearby countries, such as Kazakhstan, which lags behind only Russia in crude production among former Soviet states, as Russia raises tax rates on the oil industry amid high global prices.

Kazakhstan held 3.3 percent of the world's oil reserves at the end of 2004, according to data compiled by BP.

The country's 39.6 billion barrels of oil reserves were one-third more than the U.S. total.

Nelson more than doubled oil output in the first half to 30,000 barrels per day of oil compared with the first half of last year.

Nelson has 270 million barrels of proved and probable reserves in Kazakhstan.

LUKoil has almost 16 billion barrels of proved oil reserves under Society of Petroleum Engineers standards and output of more than 1.79 million barrels of crude per day in Russia and abroad.

(Bloomberg, Reuters)