China CEFC Energy Company Limited and JSC NC “KazMunayGas” (KMG) have signed recently transaction documents to establish a joint venture between the two energy giants. The equity proportion of KMG and CEFC in newly created joint venture is 49 to 51, respectively.
As part of the agreement, CEFC undertakes to carry out investments in Europe and countries along Silk Road in the future.
KMGI Group serves as a foundation for the development of the joint project of Kazakhstan’s National Oil and Gas Operator NC KMG and the Chinese company CEFC, named the Silk Way project. A joint working group of experts from Kazakhstan, China and Romania has undertaken significant preliminary works – particularly on the 14th of December, 2015 when there was signed a Memorandum of Understanding with the witness of the Prime Ministers of Kazakhstan and China, and on the 29th of January of this year when the parties agreed on the Key Terms of the Transaction.
“In alliance with such a strong investor we can make a major breakthrough in this direction using KMGI as a joint platform for business development,” Sauat Mynbayev, the Head of NC KMG, stated.
“The cooperation between CEFC and KMG is based on the strategic development objective, which will make KMGI a joint platform for both parties to achieve resources and performing strategy investment. This development is highly consistent with the spirit of ‘One Belt One Road’ and ‘Nurly Zhol’. We believe, it will be win-win cooperation for us to build a long term strategic partnership,” added Mr. Zang Jianjun, the Executive Director of CEFC.
It is planned that KMGI’s governance shall be carried out on the parity basis. The transaction is subject to various conditions precedent, including final approval by various European, Chinese and other regulatory authorities. It is expected the transaction will be completed by October, 2016.
CEFC is one of the most dynamically developing private companies in China. In 2014 the company entered the list of Global Fortune 500 and was ranked 349. CEFC carries out its activity in energy, financial and investment industries.
KMG International (former Rompetrol Group NV) was acquired by KMG in 2007. The company owns two refineries in Romania, as well as a network of filling stations in the EU countries. In accordance with the Decree of the Government of the Republic of Kazakhstan from the 30th of December, 2015, KMGI was included in the list of companies subject to privatization.