BG Group is in talks with the London-listed subsidiary of Kazakhstan’s national oil company over new joint ventures in oil and gas.

KazMunaiGas Exploration Production (KMG EP) has plans to expand rapidly in Kazakhstan, but Askar Balzhanov, its chief executive, also wants to do deals with international oil companies to extend its reach outside the Central Asian republic.

“We are looking at opportunities to do joint operations and they might involve asset swaps,” Mr Balzhanov said. He indicated that he was discussing opportunities with BG Group this week. The British company is already its lead partner in Karachaganak, a $5 billion (£2.4 billion) gas project in Kazakhstan.

KMG EP has amassed more than $2 billion in net cash resources and is pursuing acquisitions aggressively. In April, it paid $1 billion for Kazger-munai, a company producing 60,000 barrels of oil per day. Two smaller local companies – Kazakhoil and Kazturkmunai – are in its sights, which together would add 26,000 bpd, but the key prospect is Mangistaumunaigas, which produces 115,000 bpd from two large oilfields near Turkmenistan in the southwest of the country.

Mr Balzhanov told investors that KMG EP would like to buy Mangistaumunaigas “if the company is offered for sale”. Mangistaumunaigas is owned by Central Asia Petroleum, an Indonesian-registered company, and it is widely reported that members of the family of President Nazarbayev of Kazakhstan have interests in the oil producer.

KMG EP is being groomed as the main vehicle for the development of Kazakhstan’s oil wealth. A flotation in London and Almaty last year left 39 per cent of the company in private hands and 61 per cent owned by the national oil company, NC KMG. The latter continues to be the lead partner in big developments, such as the controversial Kashagan project in the Caspian Sea, where an international consortium is renegotiating the terms of a production-sharing agreement. Angered by a surge in the project’s costs, the Kazakh Government is seeking new terms and Mr Balzhanov said that KMG EP could be a partner in a new agreement with an increased share for Kazakhstan.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive