Caspian sale slims ConocoPhillips

ConocoPhillips is selling its stake in the enormous Kashagan offshore field in Kazakhstan in a $5 billion deal, the latest move to shrink and streamline its businesses, the corporation announced Monday.

ConocoPhillips plans to shed its minority ownership in the project, in the shallow waters of the North Caspian Sea. Kashagan was a record-breaking find when discovered in 2000 but has suffered a series of delays and cost overruns, partly related to the harsh environment.

The company has agreed to sell its 8.4 percent interest to ONGC Videsh Ltd., a subsidiary of India’s national oil company. The deal is expected to close in the first half of 2013, subject to government approval and preemption rights of other project partners. Several companies are involved in the project, including Irving-based Exxon Mobil Corp., Royal Dutch Shell, France’s Total, Italy’s Eni, Kazakhstan’s KazMunaiGas and Japan’s INPEX.

“The sale of this quality asset is an important component of our ongoing strategic asset disposition program,” said Don Wallette, executive vice president of commercial, business development and corporate planning, in a written statement. “We are pleased that ONGC Videsh recognizes the value of this asset.”

ConocoPhillips plans to sell off $8 billion to $10 billion in assets in 2012 and 2013, part of a multiyear plan to streamline the business. The Houston company already has divested $2.1 billion so far this year.

In 2010, the company announced a three-year plan to raise $15 billion to $20 billion by selling off assets deemed nonstrategic to its core businesses.

Senior analyst Philip Weiss of Argus Research said the Kashagan deal made sense for ConocoPhillips’ shrink-to-grow strategy, given the project’s slow progress.

“That project has been delayed a number of times, there’s a lot of sulfur in that field and it’s a relatively harsh environment,” Weiss said. “They can invest that in other plays where they should have a better payout.”

Kashagan is not ConocoPhillips’ only interest in country. It also has interest in the N Block exploration project in the Caspian Sea with KazMunaiGas and Mubadala.