Courtesy of the Financial Times, a report on Sinopec’s recent acquisition of Lukoil assets in Kazakhstan:

Lukoil has agreed to sell its stake in several oil projects in Kazakhstan to Sinopec for $1.2bn, in the latest of a string of Chinese investments in the country’s energy sector. The Russian company – the country’s largest private-sector oil producer – said the purpose of the sale was to “optimize Lukoil’s overseas hydrocarbon asset portfolio”.

But the deal is also symbolic of China’s rapid expansion in Central Asia, part of Russia’s traditional “sphere of influence”.

China’s ravenous appetite for natural resources has seen it buy up much of Kazakhstan’s energy industry in recent years, with Chinese equity investments now accounting for about a quarter of Kazakh oil production, President Nursultan Nazarbayev said last year.

Last year, CNPC bought an 8.3 per cent stake in Kashagan, an enormous but troubled oilfield in the Caspian Sea, for $5bn. Last autumn, Chinese president Xi Jiping toured the region, announcing $30bn of deals between China and Kazakhstan.

Lukoil said it would sell Sinopec its 50 per cent stake in Caspian Investment Resources Ltd. The Chinese state company bought the other 50 per cent in 2010.

Caspian Investment Resources holds stakes in four oil and gas projects in Kazakhstan, with Lukoil’s share of production at 28,000 barrels a day last year, the Russian company said.

Lukoil will remain in Kazakhstan. It has stakes in Tengiz and Karachaganak, the country’s two largest oilfields, as well as a pipeline transporting Kazakh oil to the Black Sea.

“The company intends to reallocate the investments to geologic exploration projects, including those in the Kazakhstan sector of the Caspian Sea,” said Vagit Alekperov, Lukoil’s president. Sinopec could not be reached.

The deal, which is conditional on approval by state authorities in Kazakhstan, is expected to close by the end of the year, Lukoil said.