CNPC Takes Big Gamble with Canadian Oil Sands Projects

Corp. (CNOOC), have also bought oil sand projects in Canada.

Sinopec bought a 40 percent stake of the Northern Lights project in 2005 and a 9.03 percent stake of Syncrude oil sand project from U.S. giant ConocoPhillips in 2010. CNOOC spent US$ 2.1 billion buying the Canadian company OPTI which owned the Long Lake oil sands project in 2011. The next year, CNOOC acquired Canada's Nexen to get its resources in Syncrude.

The projects had stable output when Sinopec and CNOOC bought them.

Before the purchase, CNPC bought other small oil sands projects. In January 2007, its Canadian branch bought mining rights for 11 projects. It did not publish a price for the fields. Data on the government website for the Canadian province of Alberta showed that CNPC paid about CN$ 28 million to get 15-year mining rights over an area of 258 square kilometers. But CNPC did not exploit oil sands on a large scale there.

These are small projects, the output would be low and the company was using them as a test for entering Canada's market, said an employee of China National Oil Development Corp. (CNODC), a CNPC subsidiary.

CNPC got over 60 percent of both projects by paying around CN$ 19 billion, hoping to avoid risks caused by changes in asset prices and administrative approvals. It got the other 40 percent of MacKay River in January 2012 and Dover this year, after both projects got government approvals.

In May 2013, Dover Operating changed its name to Brion Energy and took charge of the MacKay River project. In March 2014, local authorities approved the development plan for Dover project.

Brion Energy's CEO, Li Zhiming, who used to be a manger of CNODC's Tunisia and Nigeria projects, told Canadian media that his company considered itself Canadian, and 90 percent of its employees are Canadians with extensive experience in oil sands exploitation.

(english.caixin.com  Edited by Topco)