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Glencore said to Vie with Vitol for $1 billion Kazakh oil deal

BY STEPHEN MORRIS & ANDY HOFFMAN

GENEVA (Bloomberg) -- Glencore Xstrata and Vitol are competing to buy $1 billion of crude from Kazakhstan’s largest oil field, said two people with knowledge of the matter.

The world’s largest oil traders are negotiating to purchase KazMunaiGaz National Co.’s share of production from Kashagan, which started pumping oil last month, said the people, who asked not to be identified because the deal is private. The companies may raise pre-payment loans of as much as $1 billion to buy the oil, delivered over five years, they said.

Crude traders including Vitol, Glencore and Trafigura Beheer have been striking output deals with producers in Russia and Central Asia to secure long-term supplies of oil. Glencore and Vitol teamed up earlier this year to make a $10 billion pre-payment to Russia’s top oil producer Rosneft in return for 67 MMt of crude over five years. Trafigura, an independent oil trader, raised a $1.5 billion loan to finance deliveries from Rosneft in June.

Kashagan started production last month after eight years of delays and costs that climbed to $48 billion. Production at the Caspian Sea field will rise to 370,000 bpd in the first phase from an initial 40,000 bpd, Kurmangazy Iskaziyev, deputy head of KazMunaiGaz, said October 1. Production was halted for the second time after a gas pipeline leak, the project’s operator said October 11. KazMunaiGaz holds 16.8 % of the project.

10/15/2013

 

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