China's state-owned PetroChina will be 100% owner of Athabasca Oil Sands Corp.'s MacKay River project at a total price of $2.5 billion (Can.) after paying a further $680 million (Can.) for the remaining 40% of the firm's shares.
AOSC said it exercised an option to sell its interest in the MacKay River project in Alberta to PetroChina, which in late 2009 bought a 60% stake for $1.9 billion (Can.) (OGJ, Sept. 7, 2009, Newsletter).
Production from the development is slated to start in 2014, with an initial capacity of 35,000 b/d, eventually rising to a top-end output of 150,000 b/d. Canada's government last month gave its stamp of approval for the start of construction.
PetroChina's purchase of the MacKay River interest marks the third investment by a Chinese state-owned firm into oil sands projects in Canada, the largest being the $4.65 billion paid in 2010 by China Petrochemical Corp. for a 9% stake in Syncrude.
Canada's regulators do not need to approve the sale. Canada's government and petroleum industry have been frustrated by repeated delays by the US government in approving the Keystone XL pipeline project.
That delay by the US—which is Canada's only major oil export market—has brought a rethink in Ottawa. Indeed, the Canadians now believe that their best interest lies in diversifying oil exports to other markets.
"While we are not fans of China's human rights record, it makes sense to try to open access to China on oil, given recent protectionist US behavior," intoned an editorial in the Jan. 3 Calgary Herald.
Nor did the editorial writer mince words over the distaste felt in trading with China, saying, "Canada cannot ignore the reality of 1.3 billion people in China and its growing influence, even though that influence is not always benign."
For its part, China has shown no hesitation in seeking more oil from Canada, recently urging Ottawa to approve construction of the Northern Gateway Pipeline that would carry oil sands crude from Alberta to Kitimat in the province of British Columbia on Canada's Pacific Coast.
There is opposition to the pipeline on environmental grounds, but Prime Minister Stephen Harper is considered likely to find a way for the line to go through, especially given Washington's delay over the Keystone XL project.
Not least, Harper also will be reviewing a recent study for the Alberta government that said producers could lose $8 billion/year if the Northern Gateway isn't built and they sell into the US at discounted prices.
Leaving that outcome to the future, all eyes will now be on Washington, DC, to see what, if any, effect the efforts of the Chinese will have on the US administration as it considers the merits of the Keystone XL project in the run-up to the November elections.
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com
