Skip to main content

While some European and U.S. companies cut their exposure to the Canadian oil sands, China’s Big Three oil giants – China National Offshore Oil Corp. (CNOOC), PetroChina Co. Ltd. and China Petroleum & Chemical Corp., or Sinopec – seem content to let their bets ride even if the results haven’t been spectacular.

In 2018, PetroChina produced an average of just 7,300 barrels per day of bitumen from its MacKay River thermal oil sands project, although it was designed to produce 35,000 bpd. In June, its output was about 8,700 bpd.

The Beijing-based company paid $1.9-billion in 2009 for 60-per-cent interests in the proposed MacKay River and Dover oil sands projects being developed by Athabasca Oil Sands Corp. (now just Athabasca Oil Corp.), then bought out the rest of MacKay for $680-million in 2012 and Dover for $1.2-billion in 2014.

“MacKay River is located in an area with complex geology, which creates challenges to heat up the reservoir to get the bitumen flowing,” spokesman Davis Sheremata said in an e-mailed statement.

The company is drilling new wells and experimenting with various technologies to boost output, he said, adding a go-ahead for Dover has been put on hold until MacKay proves itself.

Still, “PetroChina Canada is committed to Canada for the long-term, having maintained its investments through economically challenging times.”

CNOOC produced about 71,000 bpd from the oil sands in 2018, little changed from 66,800 bpd in 2014, shortly after it spent $15.1-billion to buy Calgary’s Nexen Energy and its diverse portfolio of domestic and international assets.

“Our oil sands assets are an important part of our North American portfolio and we remain committed to our Canadian operations,” CNOOC spokesman Kyle Glennie wrote in a brief e-mail.

Meanwhile, Sinopec paid $4.65-billion to buy a 9-per-cent stake in the Syncrude oil sands mining consortium from ConocoPhillips in 2010 and its resulting production has been steady since, registering just over 27,000 bpd in 2018.

The Chinese energy majors employ “patient capital” and it seems unlikely they will leave the oil sands any time soon, said Jia Wang, deputy director of the China Institute at the University of Alberta.

“The assets they bought may not be the most profitable or may require more capital intensive development. … [But] these are large Chinese companies, they’re not likely to become bankrupt,” she said.

“They have been through thick and thin, and different cycles of boom and bust. These [oil sands] operations in the grand scheme of these massive companies are not the largest chunk of their business so they can afford to have a presence here without incurring too much loss.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe