* KazMunaiGas to buy 8.4 pct stake on behalf of Kazakh state
* Conoco says expects about $5 bln in proceeds from sale
* Kazakh official says China's CNPC to be offered stake
By Raushan Nurshayeva
ASTANA, July 2 (Reuters) - Kazakhstan will buyConocoPhillips out of the Kashagan oilfield for about $5billion in a possible prelude to inviting China to joindevelopment of the world's biggest oil discovery in half acentury.
Kazakhstan's Oil and Gas Ministry said on Tuesday it wouldexercise its pre-emptive right to acquire an 8.4 percent stakein the consortium developing Kashagan, thereby blocking aproposed sale to India's Oil and Natural Gas Corp.
Lyazzat Kiinov, chief executive of national oil companyKazMunaiGas -- which will buy the stake on behalf of the state-- told Reuters on Monday that Chinese state oil firmCNPC would buy a stake in the project.
Ex-Soviet Kazakhstan, home to 3 percent of the world'srecoverable oil reserves, has moved in recent years to exertgreater management control and secure bigger revenues fromforeign-owned oil and gas projects.
The Central Asian country, four times the size of Texas, isalso diverting more of its oil eastward toward energy-hungryChina and away from saturated European markets.
Houston-based ConocoPhillips, in the process of whittlingdown its worldwide portfolio of assets, last year announced itsintention to sell out of the international consortium developingthe Kashagan field in the Kazakh portion of the Caspian Sea.
In November, the company said it had agreed to sell thestake to ONGC Videsh, the overseas arm of the Indian state-ownedcompany, for about $5 billion.
In a statement on Tuesday, ConocoPhillips said the proceedsfrom the sale to KazMunaiGas would remain unchanged at about $5billion.
The U.S. company said it expected the transaction to closein the fourth quarter of 2013.
KazMunaiGas CEO Kiinov, speaking on the sidelines of a gassummit in Moscow on Monday, said CNPC would pay more than $5billion for the stake.
Sources familiar with the deal told Reuters last Friday thatCNPC was set to win Conoco's stake. One of the three sourcessaid the Chinese company would pay around $5.3-5.4 billion forthe stake.
Kashagan and neighbouring fields in the North Caspian Seahold estimated reserves of 35 billion barrels of oil in place,with 9 billion to 13 billion barrels being recoverable.
KazMunaiGas entered the Kashagan consortium as a shareholderin 2005 and has since then doubled its stake to 16.81 percent.
Kazakh President Nursultan Nazarbayev, who has ruled hisresource-rich Central Asian nation of 17 million people for morethan two decades, said last week that a multinational consortiumdeveloping the field had invested $48 billion in about 13 years,making it the costliest oil project in the world.
During Kashagan's development, production will be graduallyramped up to 370,000 barrels per day (bpd) in a second stagefrom 180,000 bpd in the first stage in 2013-14, according toNorth Caspian Operating Company, which is developing the field.
Italy's ENI, U.S. major ExxonMobil, RoyalDutch Shell and France's Total, as well asKazMunaiGas, each hold 16.81 percent stakes in Kashagan. Japan'sInpex owns 7.56 percent.
