Indonesia's Setdco buys 60% of Kazakh Mangistau

Indonesia's Setdco buys 60% of Kazakh Mangistau

ALMATY (Reuter): Central Asia Petroleum Ltd, a unit of
Indonesia's Setdco Group, has bought a 60-percent stake in
Kazakhstan's largest oil company Mangistaumunaigaz for a total of
US$4.348 billion, a senior Kazakh official said yesterday.

"The gist of the contract is as follows -- the company buys a
60 percent stake and pays $4.348 billion for it, $4.1 billion of
which is its investment proper and $248 million of which is a
bonus to the government," Deputy Prime Minister Alexander Pavlov
told a news conference.

He said the contract was signed on Sunday.

"We have committed billions of dollars of our resources to
this project and in cooperating with the government and employees
of Mangistaumunaigaz we will do our best to make it the most
successful venture in this country," said Hilmi Panigoro, head of
Central Asia Petroleum.

Pavlov, who is also chairman of Kazakhstan's tender committee,
said the Indonesian company was chosen "because its offer was
incomparably better than that of other (six) bidders".

"Out of those $4.1 billion to be invested within 20 years, $2
billion must be invested in the first five years," he said.

The government will own 30 percent of the remaining shares,
which will eventually be sold off to portfolio investors, while
workers of Mangistaumunaigaz would hold 10 percent, he said.

Pavlov said the contract provided for penalties in the case of
a possible violation of the investment schedule.

"We commend the government of this country for creating an
economic climate which is very conducive to attracting
corporations like us to invest in this economy," Panigoro said.

He said his company was planning to at least double the
production of crude oil of Mangistaumunaigaz over the next five
years.

Mangistaumunaigaz is located in the West of the Central Asian
state and is its largest oil company. Last year it produced only
four million tons of oil.

In Soviet times oil production at Mangistaumunaigaz, which
sits on reserves estimated at 200 million tons, peaked at 25
million tons which is equivalent to Kazakhstan's current annual
oil output.

Pavlov said the government hoped that large foreign investment
would revive the troubled oil industry and also maintain its
social infrastructure, reduce unemployment and improve the
workers' skills.