China's state-controlled Sinopec has deepened its interests in Alberta's oil sands by agreeing to pay $4.65-billion (U.S.) for ConocoPhillips Co.'s 9 per cent stake in Syncrude Canada Inc.
Sinopec is a subsidiary of China Petroleum & Chemical Corp., one of a triumvirate of state-controlled firms that have been scouring the globe for energy assets in recent years. Sinopec is also 50 per cent joint-venture partner with France's Total SA in the Northern Lights oil sands project, a development property 100 kilometres northeast of Fort McMurray.
ConocoPhillips announced last October that it was looking to divest $10-billion in assets and company chairman Jim Mulva said the Syncrude sale represents "an important step" in reaching that goal.
"We are pleased that [Sinopec]has recognized the value of this quality asset," Mr. Mulva said in a statement Monday. "The completion of this transaction demonstrates the strength of the asset base available to meet our asset sales goals."
The company said sale of its stake in the Syncrude mining operation does not indicate that it is retreating from the oil sands.
"We remain very committed to our position as one of the largest players in the Athabasca sands," said spokeswoman Nancy Turner. She noted Conoco and its partner, Total, recently approved an 83,000 barrel per day expansion of the Surmont project, which uses steam-assisted gravity drainage (SAGD) to recover bitumen from underground..
The company said it hopes to close the transaction in the third quarter, subject to approvals from Canadian and Chinese governments.
The Canadian government has sent mixed signals with regard to investment from Chinese state companies in natural resource companies here. Ottawa has welcomed those companies to invest in projects that would boost production, or in taking minority stakes in existing producing firms. But it has added a layer of review to ensure the foreign state-owned companies manage their investment on purely commercial basis, and would scrutinize more closely a Chinese acquisition of a major Canadian producer.
Last December, Ottawa approved the $1.9-billion (Canadian) acquisition by state-owned PetroChina Co. of 60 per cent stake in Athabasca Oil Sands Corp.'s Mackay and Dover projects.
Syncrude - one of Canada's earliest oil sands projects - is owned by seven partners, including Canadian Oil Sands Ltd., with 36.7 per cent; Imperial Oil Ltd., with 25 per cent; and Suncor Energy Inc., with 12 per cent. The project now produces 350,000 barrels per day.