July 3, 2018 / 8:58 AM / in 4 months

KazMunayGaz deal to sell stake in Romanian arm to China's CEFC falls apart: sources

FILE PHOTO: The logo of Kazakh state-owned oil and gas company KazMunayGas is seen at company's gas station in Almaty, Kazakhstan, May 4, 2016. REUTERS/Shamil Zhumatov/File Photo

BEIJING/ALMATY (Reuters) - The deal by Kazakh state energy firm KazMunayGaz KMGZ.KZ to sell 51 percent of its Romanian business to Chinese energy giant CEFC has fallen apart, three sources familiar with the talks told Reuters.

KazMunayGaz agreed in December 2016 to sell CEFC a 51 percent stake in its international business, KMGI, which owns a refinery in Romania and petrol stations in Romania, Bulgaria, Moldova and other countries. 

The company said in March that the deal was still on despite the investigation of CEFC’s chairman for suspected economic crimes.

On Tuesday, the three sources familiar with the talks told Reuters that the deal has fallen apart.

“There will be no deal,” a senior Kazakh official told Reuters. Asked whether any third party had been offered that stake, the official said: “It’s a long process, but there is interest in it.”

Two senior Chinese sources briefed on the status of the deal confirmed that it has fallen apart. One said CEFC had been expected to pay about $50 million as a deposit to keep the deal alive but that the Chinese company could not make that payment before a June deadline.  

KMG and CEFC both did not reply for Reuters requests for a comment.

The once high-flying Chinese conglomerate has over the past few months been trying to shed assets in an effort to repay its debt as banks and auditors pore over its financial statements.

A deal by CEFC to buy a stake in the Russian state oil producer Rosneft (ROSN.MM) has also fallen apart earlier this year.

Additional reporting by Kane Wu in HONG KONG and Alla Afanasyeva in MOSCOW; Writing by Katya Golubkova; Editing by Louise Heavens

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