Shell gambles with Caspian snub

A CONSORTIUM of Western oil majors including Shell has blocked a Chinese rival's £400m bid to buy into one of the world's biggest oil and gas projects.

The Chinese group, CNOOC, said the partners in the Kashagan field under North Caspian Sea had taken up their 'pre-emption' rights and bought an 8.33% stake in the development put up for sale by BG Group.

BG agreed a deal with CNOOC two months ago but a sale has to be approved by the group's partners. BG agreed a second sale to China's Sinopec a week later and this is now almost certain to also be blocked.

That move will surprise analysts who warned such a decision could provoke the Chinese into hampering Shell's ambitious expansion plans in the country. Han- Pin Hsi, of Deustche Bank, said: 'I thought they would think twice as there is always the chance that the government might retailiate.'

Shell has a 16.67% holding in Kashagan alongside Italy's ENI, ExxonMobil, TotalFinaElf, Conoco Philips and Japan's Inpex. The field is believed to hold reserves of 10bn barrels.