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The CEO of Kazakh state energy company KazMunaiGas confirmed on July 1 that China is set to pay up to $5.4bn for a 8.4% stake in the giant offshore Kashagan field, with an official announcement expected imminently.

In an interview with Reuters in Moscow, Lyazzat Kiinov said that the stake in the North Caspian Operating Company (NCOC) - the consortium developing Kashagan - which is being sold by US major Conoco Phillips, will be sold to China National Petroleum Corp (CNPC) via back-to-back deals with KMG. He did not offer a deadline for the deal's completion but said he hoped it would close quickly.

As bne reported on July 1, speculation had already spiked that state owned CNPC would get its hands on the stake, despite an agreement struck by the US company in November to sell it to India's ONGC Videsh Limited (OVL). The price the Chinese company has reportedly agreed is slightly above the $5bn the Indian state-controlled company had agreed.

Having invoked legislation allowing it the final say on "strategic" investments in the country to delay that deal, the Kazakh government was expected to make a decision on the sale of the stake to OVL by May 25. However, those negotiations have dragged on, with Chinese officials understood to be lobbying for the asset.

China has been steadily increasing investment in Kazakhstan's oil and gas sector, as it seeks to secure steady supplies of hydrocarbons to meet growing domestic demand, and around 25% of Kazakhstan's oil output is now produced by Chinese companies. A purchase of Conoco Phillips' stake would finally give Beijing an interest in the massive offshore field a decade after members of NCOC blocked an attempt by CNOOC and Sinopec to buy BG Group's holding.

With a similar thirst for energy, India has also invested in oil and gas assets in the Caspian region, buying into Kazakhstan's Satpaev field as well as investing into Azeri assets. However, there is no infrastructure linking the region to India, despite a proposal from New Delhi to build a pipeline.