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.