Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Early evening shots of Nexen's Long Lake Phase I integrated oil sands facility situated 40 km south east of Fort McMurray, Alberta.

Chinese companies have shelled out more than $30-billion in Canada's energy industry, but many of those investments have been hit with operational problems, delays and weak returns, leading to growing impatience in some quarters in China.

PetroChina Co. Ltd., Sinopec, CNOOC Ltd., China Investment Corp. and other state-owned enterprises made a raft of big bets on oil sands projects, shale developments and domestic companies since 2005 and many have yet to pay off.

There is "absolutely" some buyer's remorse stemming from many of China's big-ticket acquisitions, said Samir Kayande, vice-president of energy research at ITG Investment Research, who has done intensive studies of some of the deals.

Story continues below advertisement

Some problems were the result of purchases made during a rush on assets across the industry, when competition from both domestic and foreign buyers was brisk, Mr. Kayande said. Eventually, assets in the best geological regions are likely to pay off, and those further from the earliest developments will lag in performance, he said.

Officials with the Chinese companies, and Canadians familiar with their thinking, say it is far too early to deem the buying spree, in a notoriously difficult industry, a bust.

Not all China's problems are directly related to the land its companies acquired. Some could not have been predicted.

However, recent high-profile troubles have brought China's record in Canada's oil patch into sharp focus.

Among trouble spots, PetroChina has yet to pay its partner, Athabasca Oil Corp., for its 40-per-cent stake in the Dover oil sands project five months after exercising an option to acquire it. Athabasca chief executive officer Sveinung Svarte said this month the two sides have a timetable for closing the deal, but declined to give details.

Meanwhile, PetroChina's parent company, China National Petroleum Corp., is investigating embezzlement at its global subsidiaries, including PetroChina, with unknown ramifications on Canadian operations.

Executives tied to the Canadian business have been detained in China in recent weeks.

Story continues below advertisement

Syncrude Canada Ltd., in which Sinopec and PetroChina have stakes, has been forced to seek solutions to technical problems that have hampered the reliability of its massive equipment.

It has resulted in drops in production and has prompted the joint venture to push back expansion plans by several years.

Based on the current stock price of the largest Syncrude owner, Canadian Oil Sands Ltd., the value of Sinopec's 9-per-cent stake is well below the $4.65-billion it paid in 2010, according to FirstEnergy Capital Corp. analyst Michael Dunn.

CNOOC Ltd. has faced well-known struggles at its Long Lake, Alta., oil sands project that have kept it running well under capacity since Nexen Energy ULC started it up more than five years ago. CNOOC acquired Nexen in late 2012 in a controversial $15.1-billion deal, though it knew of Long Lake's problems because it had previously bought Nexen's former partner, OPTI Canada Inc.

Late last year, CNOOC's chief energy researcher lamented that commitments the company made to Ottawa to secure the deal, such as keeping up spending and staff numbers, have hurt financial results.

CNOOC's companywide return on investment "on average surpasses 11 per cent," compared to just 3.5 per cent for the Nexen assets, Chen Wei Dong told The Globe and Mail in Beijing.

Story continues below advertisement

"So that is a problem. That is a concern," he said.

CIC, the sovereign wealth fund, is a joint venture partner with, and has a nearly 5-per-cent stake in, Penn West Petroleum Ltd., which has been restructuring for much of the past year.

In July, Penn West disclosed accounting irregularities that triggered a steep drop in the stock.

Starting in the past decade, China sought global energy assets to help fuel its expanding economy, and Prime Minister Stephen Harper's Conservatives actively courted investment in official visits as part of an overall push to make the country an energy power.

The activity slowed to a trickle following the CNOOC-Nexen deal, when Ottawa imposed rules that effectively barred bids for control of oil sands assets by state-owned enterprises, fearing growing ownership of the key assets by foreign governments. Since then, China has pulled the trigger on just a handful of smaller acquisitions with prices that fall under the threshold for an Investment Canada review.

Officials point out that all domestic and foreign developers are dealing with rising costs and other troublesome oil sands industry issues, including delays in adding oil pipeline capacity to markets in the United States and Asia.

Story continues below advertisement

"I think every company has the same problem," Feng Zhiqiang, chairman of North American operations for Sinopec, said in an interview. He said Sinopec is pleased with its operation in Canada, and believes it will be a good place to invest in the long term.

Wenran Jiang, special adviser to the Alberta government on energy issues, said Chinese companies have not operated in Canada long enough enough to judge its investments. Indeed, some deals have paid off handsomely, notably CNOOC's $105-million purchase of an interest in MEG Energy Corp. in 2005. MEG has shown steady growth and solid returns.

"Looking across the board, these are Canadian market issues, oil sands operational issues," he said. "So I'm not inclined, after looking at each of the particular issues facing CNOOC, Sinopec and the Athabasca-PetroChina joint venture, to single out China as being a bad operator. We don't have a long enough record to prove they are less efficient."

Officials with CNOOC and PetroChina in Canada were not available for comment.

With files from Nathan VanderKlippe in Beijing

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies