China Energy Company Limited (CEFC) is to become the majority shareholder of KMG International, the owner of Romania’s largest oil refinery, Petromidia.

The memorandum of understanding on the sale was concluded in Beijing within a broader package of $4bn worth of deals agreed between China and Kazakhstan.

The agreement to sell the stake in KMG International is part of a divestment of non-core assets by Kazakhstan’s state holding company Samruk-Kazyna, the owner of National Company KazMunayGas (KMG), formerly KMG International’s sole owner. KMG has expanded in recent years, but now needs more cash given the current low oil prices and the slowdown of the Kazakhstani economy.

The size of the deal, which reportedly requires European Commission approval, was not disclosed but Reuters quotes a source as saying the company was valued at between $500mn and $1bn. The private Chinese firm reportedly agreed to take over 51% of KMG International. KMG will continue to hold the remainder of the company.

KMG International said in a December 15 press release that it “salutes the ... conclusion in Beijing of the Memorandum of Understanding ... for the constituting and developing at the international level of a strategic partnership in the Oil & Gas field.”

The statement says that the strategic partnership will “establish the necessary framework for future joint projects” between KMG, CEFC and KMG International.

“KMG will consider on a long-term perspective continuing of crude oil supplies towards KMGI subsidiaries in order to sustain and extend their core operations in Europe,” it adds.

In addition to the Petromidia refinery, KMG International (formerly the Rompetrol Group) also owns two smaller refineries and more than 1,000 petrol stations in Romania, Moldova, Bulgaria, France, Spain, Georgia, Ukraine under the Rompetrol and Dyneff brands. It is involved in oil products trading through subsidiaries in France, Spain and Switzerland.

The Rompetrol Group was founded by Romanian businessman Dinu Patriciu. In 2007, Patriciu sold 75% of the company to the Kazakh state group, which later took over the remaining 25%.

Unofficial Romanian sources confirmed that an agreement between Romania’s government and KMG International on Rompetrol Rafinare’s ownership remains valid following the deal with CEFC.

Under the agreement, KMG International is supposed to take over 26.7% of the refinery for $200mn and to set up an $150mn investment fund of which 20% would be transferred free of charge to the Romanian state. After the sale of its 26.7% stake to KMG International, the Romanian state will still hold 18% in the refinery.

In September, KMG International announced preliminary steps aimed at the sale of a 51% stake of its car fuel distribution chain in Spain and France (incorporated as Dyneff) to the same Chinese investor.

KMG International reported an 11% rise in EBITDA to $136mn and a net profit of $11.4mn for January-September 2015, as compared to a negative value of $30mn in the same period of 2014. In the context of the major depreciation of raw materials (crude oil) and finished products, the gross turnover recorded in the same period decreased by 25%, from approximately $10.3bn to $7.7bn.

The crude processed in KMG International’s three production facilities – all located in Romania and operating under Rompetrol Rafinare – increased by 11% y/y to 4.5mn tonnes.