Monday March 13, 2017

Gauging concern: foreign energy companies turn away from oilsands

In a nearly $13-billion dollar deal, a Canadian company took over Shell's majority stake in the Athabasca Oil Sands Project on March 9, 2017.

In a nearly $13-billion dollar deal, a Canadian company took over Shell's majority stake in the Athabasca Oil Sands Project on March 9, 2017. (AP Photo/Peter Dejong, File)

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Last week Royal Dutch Shell announced a massive sell off of most of its stake in the Alberta oil sands.

"Nobody saw it coming," business columnist Deborah Yedlin tells The Current.

But Yedlin says the decision makes sense, given the company's interest in becoming a big player in the natural gas industry. "This is just one more step in terms of freeing up capital to be able to do that."

"Shell is looking at the oilsands relative to other opportunities that it has, and saying 'I think we can make these dollars generate a better return for our shareholders somewhere else,'" Yedlin explains. "It's not political."

But Rafi Tahmazian, director and senior portfolio manager at Canoe Financial, is one of many blaming the move on the provincial and federal government's climate-friendly posturing.

'[Shell] made statements about globally changing direction to focus on projects that involve growth … and in the same breath they say that the Alberta oilsands are no longer fitting into that model. So to not be able to see it as a growth model means there are certain restrictions.' - Rafi Tahmazian

"In the last 18 months we've seen a provincial government here, and a federal government, that has been seen as against the oil patch," says Tahmazian. 

Shell isn't the only foreign company to pull up its stakes recently. Earlier this year, Norway's Statoil closed a deal to sell-off its Canadian assets.

But Yedlin says these moves correspond with a general international trend of consolidation, and points to the fact that Shell was a force in shaping the carbon policy in Alberta.

Martha Hall Findlay, president and CEO of the Canada West Foundation, adds Cenovus and Suncor to the list of energy companies that publicly support Premier Notley's carbon tax.

"Other companies worldwide are advocating for a carbon price," Findlay tells Anna Maria Tremonti.

"Canada is actually well behind."

Findlay goes on to say Canada's energy sector should stick with the government's new direction if it's worried about divestment.

"Foreign investors want certainty ... The worst possible thing from a foreign investment perspective would be to have those things reversed."

This segment was produced by The Current's Liz Hoath and Sam Colbert.

Listen to the full conversation at the top of this post.