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The Dover oil sands project, operated by Brion Energy. Athabasca Oil says a deal is close on the sale of its stake in the fledgling operation to a Chinese state-owned company. (Dan Bannister)
The Dover oil sands project, operated by Brion Energy. Athabasca Oil says a deal is close on the sale of its stake in the fledgling operation to a Chinese state-owned company. (Dan Bannister)

Athabasca says Dover oil sands sale to proceed Add to ...

Athabasca Oil Corp. said a deal to allow it to sell its stake in a fledgling oil sands operation to a Chinese state-owned company will proceed despite recent reports of Chinese oil executives with connections to Canada being arrested.

The reports, in Chinese media, have rocked Athabasca’s share price over the past week, and come as China continues with a widespread crackdown on senior officials facing allegations of corruption.

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Matt Taylor, vice-president capital markets and communications for Athabasca Oil, said recent reports about the whereabouts of Margaret Jia – who served as the general manager of China National Petroleum Corp.’s Canadian operations and had worked in Calgary – has led to “speculation” that has hurt the company’s share price. But he said the reports about Ms. Jia are “unrelated” to the workings of Athabasca or the $1.23-billion (U.S.) of proceeds from a put option the company expects to receive from China National Petroleum’s PetroChina Co. Ltd.

Athabasca has been long been looking to close the deal to sell its stake in the Dover oil sands project to PetroChina’s Canadian unit. Regulatory approval of the project earlier this year triggered Athabasca to exercise the put option, and investors have been anxiously waiting for the deal to close so the infusion of dollars can be put toward Athabasca Oil’s other projects.

But last week, the Athabasca share price dropped following reports that Zhiming Li, the former chief executive of Brion Energy –the joint venture between Athabasca and PetroChina that operates Dover – had been taken in for questioning in China along with another China National Petroleum official. It’s not clear why Mr. Li was arrested and whether it has any connection to the anti-corruption campaign. In regards to Mr. Li’s arrest, Mr. Taylor said Athabasca Oil “can’t comment on PetroChina’s internal affairs.”

In May, it was reported that PetroChina’s overseas operations chief Bo Qiliang – who had led aggressive international expansion efforts in Canada and other countries – is under official investigation after being removed from his post.

Then, on Friday, Chinese news media reported that Ms. Jia’s whereabouts are unknown. One news outlet, the Want China Times, said she has been arrested. Chinese financial news website Caixin reported there is no evidence to link Ms. Jia with any corruption investigation.

In Calgary, Mr. Taylor said Ms. Jia “had no involvement with Athabasca or Brion or our transaction. So it was an unrelated event.”

Without giving a timeline, Mr. Taylor said Athabasca is in regular discussions with Shudong Chen, the incoming Canadian director for China National Petroleum, and a deal is close. “We’re well advanced in it,” he said.

Athabasca Oil shares closed lower Monday, dropping 2.73 per cent to $6.77. Shares have lost 4.65 per cent over the last five days.

In a note, Canaccord Genuity Inc. analyst Phil Skolnick said he still believes the four arrests are part of a broader shakeup in the Communist party as opposed to anything specific to Athabasca Oil. He said he still expects the put proceeds to be paid.

“Ms. Jia was not involved with PetroChina’s business in Canada or Brion Energy,” Mr. Skolnick wrote, citing Athabasca Oil as the source of his information.

Wenran Jiang, a special adviser to the Alberta government on Canada-China energy issues, cautioned that too little is known about the Chinese arrests to assert that there are connections to how much was paid or promised on Canadian oil sands deals.

“It is an extensive expansion of the crackdown on corruption related issues, networking, nepotism ... within the largest Chinese energy company,” Mr. Jiang said.

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