PetroChina offers $2B for oilsands stake
PetroChina will acquire a 60 per cent interest in two Canadian oilsands projects for $1.9 billion.
Athabasca Oil Sands Corp. on Monday announced plans to sell working interests in the company's MacKay River and Dover oilsands projects to the Chinese energy giant.
The agreements also provide for certain financing arrangements for Athabasca.
"Oilsands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market," Athabasca chair Bill Gallacher said in a release.
The projects are located in the centre of the Athabasca area in northeastern Alberta. The company says they are estimated to contain approximately five billion barrels of bitumen, the thick tar-like substance that can be refined into usable petroleum products.
The pact will ensure the projects will be developed "in a timely manner," Gallacher said.
PetroChina is not the first Chinese firm to show interest in northern Alberta's vast oil reserves, which are second only to Saudi Arabia's in size.
Sinopec Corp. has a 50 per cent stake in the Northern Lights project 100 kilometres northeast of Fort McMurray Alta., with French energy giant Total S.A. holding the rest.
Rumours persist that Nexen Inc., operator of the Long Lake oilsands venture, could be in the sights of a major Chinese state-owned firm, though a deal has thus far not materialized.
"The Chinese, with their big wad of cash in their back pocket, are coming hunting," Geopolitics Central economist Vince Lauerman said.
"[They] want to diversify their sources of supply for energy security reasons and Canada has huge resources that they would like to gain greater access to."
The takeover would have to pass a new national security test recently incorporated into the Investment Canada Act, under which the federal government could block a deal if it was deemed to pose a threat to national security.
This month, Finance Minister Jim Flaherty and representatives of corporate Canada embarked went on a trade mission in China. Prime Minister Stephen Harper is scheduled to make his first formal visit to China later this year.
Given that renewed focus on Sino-Canadian relations, it is unlikely that Ottawa would do anything to scuttle the deal.
Indeed, Lauerman does not foresee government intervention being a major risk in the PetroChina-Athabasca deal, he said.
"I think that our government is much more open to joint ventures and that sort of thing, especially when it involves relatively small players," he said.
- A previous version of this story incorrectly stated that bitumen can be refined into conventional oil. In fact, bitumen is by definition not conventional oil, as conventional and unconventional oil refer to the manner in which the oil is extracted or produced.Sep 01, 2009 11:30 AM ET
With files from The Canadian Press