* KazMunaiGas to buy 8.4 pct stake on behalf of Kazakh state
* Conoco says expects about $5 bln in proceeds from sale
* Kazakh official says China's CNPC to be offered stake
By Raushan Nurshayeva
ASTANA, July 2 (Reuters) - Kazakhstan will buy ConocoPhillips out of the Kashagan oilfield for about $5 billion in a possible prelude to inviting China to join development of the world's biggest oil discovery in half a century.
Kazakhstan's Oil and Gas Ministry said on Tuesday it would exercise its pre-emptive right to acquire an 8.4 percent stake in the consortium developing Kashagan, thereby blocking a proposed sale to India's Oil and Natural Gas Corp.
Lyazzat Kiinov, chief executive of national oil company KazMunaiGas -- which will buy the stake on behalf of the state -- told Reuters on Monday that Chinese state oil firm CNPC would buy a stake in the project.
Ex-Soviet Kazakhstan, home to 3 percent of the world's recoverable oil reserves, has moved in recent years to exert greater management control and secure bigger revenues from foreign-owned oil and gas projects.
The Central Asian country, four times the size of Texas, is also diverting more of its oil eastward toward energy-hungry China and away from saturated European markets.
Houston-based ConocoPhillips, in the process of whittling down its worldwide portfolio of assets, last year announced its intention to sell out of the international consortium developing the Kashagan field in the Kazakh portion of the Caspian Sea.
In November, the company said it had agreed to sell the stake to ONGC Videsh, the overseas arm of the Indian state-owned company, for about $5 billion.
In a statement on Tuesday, ConocoPhillips said the proceeds from the sale to KazMunaiGas would remain unchanged at about $5 billion.
The U.S. company said it expected the transaction to close in the fourth quarter of 2013.
KazMunaiGas CEO Kiinov, speaking on the sidelines of a gas summit in Moscow on Monday, said CNPC would pay more than $5 billion for the stake.
Sources familiar with the deal told Reuters last Friday that CNPC was set to win Conoco's stake. One of the three sources said the Chinese company would pay around $5.3-5.4 billion for the stake.
Kashagan and neighbouring fields in the North Caspian Sea hold estimated reserves of 35 billion barrels of oil in place, with 9 billion to 13 billion barrels being recoverable.
KazMunaiGas entered the Kashagan consortium as a shareholder in 2005 and has since then doubled its stake to 16.81 percent.
Kazakh President Nursultan Nazarbayev, who has ruled his resource-rich Central Asian nation of 17 million people for more than two decades, said last week that a multinational consortium developing the field had invested $48 billion in about 13 years, making it the costliest oil project in the world.
During Kashagan's development, production will be gradually ramped up to 370,000 barrels per day (bpd) in a second stage from 180,000 bpd in the first stage in 2013-14, according to North Caspian Operating Company, which is developing the field.
Italy's ENI, U.S. major ExxonMobil, Royal Dutch Shell and France's Total, as well as KazMunaiGas, each hold 16.81 percent stakes in Kashagan. Japan's Inpex owns 7.56 percent.