Norway’s Statoil ASA and PTTEP of Thailand have agreed to carve up their northern Alberta interests in a deal that will trigger the first government review of an oil sands transaction by a foreign state-owned oil company since Prime Minister Stephen Harper tightened the rules more than a year ago.
Under the agreement, which will sever a joint venture that government-controlled PTTEP bought into for $2.3-billion (U.S.) in 2011, each partner will gain 100-per-cent interests in various leases that have been within a collection of properties known as the Kai Kos Dehseh project.
The companies said that divvying up the assets will allow each to spend money and develop their steam-driven oil sands projects at their preferred paces against a backdrop of rising industry-wide costs and uncertain heavy-oil markets. PTTEP currently has a 40-per-cent interest in the partnership.
The Thai company’s acquisition of Statoil’s interests in three leases is subject to review under the Investment Canada Act, a official with Industry Minister James Moore’s office said. PTTEP is the applicant, though officials with its Calgary office declined to comment.
Statoil Canada president Stale Tungesvik said his company, which is 67 per cent owned by the Norwegian government, would provide the necessary information to assist in the process.
When Ottawa approved the takeovers of Nexen Inc. by China’s CNOOC Ltd. and Progress Energy Resources by Malaysia’s Petronas in late 2012 following months of deliberation and public debate, Mr. Harper effectively closed the door on bids for control of oil sands assets by state-owned enterprises (SOEs) except in exceptional circumstances.
He said at the time that Canadians had not gone through years of reducing ownership in resources by their own governments only to have them controlled by those from other countries.
The Statoil-PTTEP agreement does not appear to represent one of the exceptional circumstances Mr. Harper referenced, but his government is likely to approve the transaction anyway, said David Woollcombe, a lawyer with McCarthy Tétrault in Toronto who specializes in mergers and acquisitions.
“The splitting of oil sands assets among existing foreign SOEs doesn’t amount to the introduction of additional state-owned enterprise ownership in the oil sands,” Mr. Woollcombe said. “I think the principal objective of the government’s policy, namely [curbing] increased state-owned concentration in the oil sands, isn’t violated.”
In addition, the companies are not oil-industry arms of states that raise troublesome political issues for the government, he said.
Tightened restrictions on foreign buyers have been one factor in a big drop in acquisitions throughout the energy sector over the past year, oil and investment banking sources say. In fact, in a sharp contrast with previous years, foreign national oil companies snapped up no oil sands assets in 2013, according to TD Securities Inc.
If the deal is completed by the third quarter as planned, PTTEP will own the undeveloped Thornbury, Hangingstone and South Leismer leases outright. Statoil gets the Leismer project, which now produces about 20,000 barrels a day, and a planned multibillion-dollar development known as Corner. It will also pay PTTEP $200-million.
“For us, we get more interest in the producing asset at Leismer, and also more ownership in the more mature project-development phase at Corner, and that’s a good strategic fit for us,” Mr. Tungesvik said in an interview.
As part of a global review, Statoil has been weighing how much money it should funnel into its oil sands projects with its offshore prospects on Canada’s East Coast looking bright following some large oil discoveries.
It had planned to make a sanctioning decision on Corner early this year, but has put it off until the transaction with PTTEP closes, it said.
The project would help Statoil more than quadruple its oil sands output. It also has plans to double output at Leismer to 40,000 barrels a day.
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|STO-N Statoil ASA||27.55||
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