(Photo : The headquarters of China National Petroleum Corporation and PetroChina, outside of Dongzhimen, Beijing)

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Chinese President Xi Jinping has agreed to $5 billion deal that would give a state-owned company 8.33 per cent stake in Kazakhstan's giant Kashagan oilfield.

State-owned Xinhua News Agency said President Xi struck a deal with Kazakhstan during his visit. The deal gives China National Petroleum Corp (CNPC) an 8.33 per cent interest in the giant offshore field located in the Caspian Sea.

Xi told a news briefing that the two countries have agreed on the deal. The Chinese president struck the deal with Kazakh President Nursultan Nazarbayev. Nazarbayev said the agreements signed with China especially in the oil and gas sector are essential to the economic development of Kazakhstan.

35 Billion Barrels of Reserve Oil

The Kashagan oilfield has an estimated reserve of 35 billion barrels of oil in place. The field is expected to produce its first oil within this year, source said.

The $5 billion deal, however, was not the only agreement that President Xi signed during his visit in Kazakhstan. President Nazarbayev said his country and China inked 22 agreements worth at least $30 billion during Xi's visit.

The $5 billion, 8.4 per cent stake in Kashagan will be purchased by China from US oil major ConocoPhilips, which is selling the stake in order to exit the oil project.

World's Largest Oil Discovery in 5 Decades

ConocoPhillips earlier said it would sell the stake to the overseas unit of ONGC, India's state-run oil and gas firm. Kazakhstan, however, decided to use its pre-emptive right to buy the stake in Kashagan and then sell it to CNPC.

The sale to CNPC blocked India's plan to become part of the Kashagan project. Other shareholders in the said project include Italy's ENI, ExxonMobil of the US, Royal Dutch Shell, and Total of France.

The Kashagan oilfield is considered as the world's largest oil discover in 50 years. A Kazakh official said the deal with China is expected to be closed by latest this month or late October.