Cenovus has shipped a cargo of crude oil from its flagship Christina Lake bitumen project in northeastern Alberta to Europe, adding to a steady trickle of Canadian oil that has flowed to international buyers despite opposition to major export pipelines.Hand-out
Cenovus Energy Inc. is intensifying efforts to export crude to global markets as the oil sands producer seeks higher margins for severely depressed barrels.
Cenovus has shipped a cargo of crude oil from its flagship Christina Lake bitumen project in northeastern Alberta to Europe, adding to a steady trickle of Canadian oil that has flowed to international buyers despite opposition to major export pipelines.
A spokesman for the company confirmed the delivery but declined to provide details, citing confidentiality reasons. However, tanker-tracking firm ClipperData said a shipment of about 520,000 barrels of crude was loaded at Freeport, Tex., and arrived at Repsol SA's Cartagena refinery in southeast Spain on Dec. 17.
It marks the second time the Calgary-based company has exported crude to Europe from the Gulf Coast, following an earlier shipment in the fourth quarter, spokesman Reg Curren said in an e-mail.
"We've been working to take greater control over a larger part of our value chain, which we believe will result in improved margins and higher returns for our shareholders," he said.
"By getting our oil to ports, we believe it will lead to more competition for our product and give us access to international prices, which are generally higher."
Cenovus is expanding its marketing efforts amid plans by the company to open a new oil-trading office in Houston, a strategy aimed at building relationships and cultivating market intelligence in the continent's largest heavy-oil refining region.
The latest shipment comes as U.S. legislators move to lift a decades-old ban on oil exports, potentially easing a continental glut. Under existing rules, exports of Canadian oil have been permitted so long as they aren't mingled with domestic U.S. crude.
A handful of companies, including BP PLC and Total SA of France, have taken advantage of the measure, bypassing snarls that have led to hefty discounts on heavy Canadian oil compared to the headline North American oil price.
That price gap has narrowed considerably as pipeline expansions on the Enbridge Inc. system start up and more crude is shipped on trains.
Nonetheless, Canada's benchmark heavy oil price has slumped to multiyear lows in recent weeks, sapping profits from even the most efficient projects.
Western Canada Select, a blend of heavy oil and bitumen from the oil sands, last sold for $14.20 (U.S.) per barrel under U.S. benchmark West Texas intermediate oil in Thursday trading, broker Net Energy Inc. said. That implies a value of about $19.27 per barrel for the Canadian oil. Brent, the global standard, fetched about $34 a barrel in midday trading.
Like its peers, Cenovus has shelved growth projects and dialled back spending to cope. It plans to spend $1.4-billion to $1.6-billion (Canadian) this year, down 19 per cent from levels a year ago.
Chief executive officer Brian Ferguson has said it could chop another $200-million from the budget if necessary. The company plans to open its Houston office in the first quarter, Mr. Curren said.