Oil and Gas

EXCLUSIVE-Russia's Lukoil to sell stake in oldest Kazakh asset - sources

MOSCOW, Dec 11 (Reuters) - Lukoil plans to sell its 50% stake in Turgai Petroleum, its oldest oil asset in Kazakhstan, as Russia’s No 2 producer seeks to boost its revenues by focusing on more profitable fields, four industry sources told Reuters on Friday.

Lukoil, Russia’s top private oil company, entered neighbouring Kazakhstan in 1995, but output at its oldest field there has slowed to a trickle, while Lukoil’s need for cash is pressing as at least 100% of its adjusted free cash flow goes in dividends.

Following the sale, it would concentrate on Kazakhstan’s giant Tengiz and Karachaganak oilfields, in which it holds minority stakes, the sources said.

Other major oil companies have been streamlining portfolios after pandemic lockdowns and a deep fall in energy demand helped to drive oil prices to the lowest levels this century earlier this year.

The sources, who asked not to be named because they are not authorised to speak to the press, did not say how much the deal might be worth but said the buyer was a private company KVK Petroleum co-owned by Timur Kulibayev, a son-in-law of ex-Kazakh president Nursultan Nazarbayev.

Three of the four sources expected the deal to close this month.

Kulibayev already has interests in oil producing and oil servicing companies in Kazakhstan, as well as in other assets from financials to telecoms.

Lukoil did not reply to a Reuters request for comment. KVK Petroleum could not be reached.

Kazakh National Chamber of Entrepreneurs, where Kulibayev holds a senior management position, did not reply to a Reuters request for a comment.

The remaining 50% of Turgai Petroleum is owned by PetroKazakhstan, a joint venture between China’s state energy company CNPC and Kazakh state firm KazMunayGaz.

Turgai operates the Kumkol oilfield, whose output has declined in the last decade to around 350,000 tonnes of oil per year.

“There is nothing left there. Obviously it’s for sale”, said a source familiar with Lukoil’s plans to sell the asset, which was the first the Russian company bought in Kazakhstan in 1995.

Oil produced by Turgai Petroleum is mainly supplied to the Kazakh Pavlodar refinery and to China via the Atasu-Alashankou pipeline.

Lukoil owns a 13.5% stake in the Karachaganak project, holds another 5% in Tengizchevroil and a 12.5% stake in Caspian Pipeline Consortium, which ships Kazakh oil to the Russian Black sea coast for further exports to Europe. (Reporting by Alla Afanasyeva, additional reporting by Olzhas Auyezov and Olga Yagova, writing by Olga Yagova; Editing by Katya Golubkova and Barbara Lewis)