Chinese companies are set to spend billions more on Canadian oil and gas properties in coming years, as the resource-hungry nation scours the world for energy, the executive in charge of Canadian operations for one of China's major state-owned oil firms says.
Spurred by new mandates to invest overseas, and an easing in travel restrictions to Canada, in the next five years, "a lot of companies will come here to look for resources and to make an investment," said Zheng Li, president of CNOOC Canada Ltd., which was among the first Chinese companies to invest heavily in Canada's oil patch, paying $150-million for a 16.69-per-cent stake in MEG Energy Corp. in 2005.
Mr. Li's own mandate in Canada, he said, is to look at investment opportunities here, evaluate which are worthwhile and report back to decision-makers in China. His interest is shale gas and oil - and especially the oil sands - and his ambition is to connect Chinese capital with Canadian opportunity.
"There will be more" billion-dollar deals between Chinese and Canadian companies, Mr. Li said in an interview.
CNOOC is one of several Chinese firms with a presence in Canada, although Mr. Li said major investments are conducted in China, and investment bankers say when they are working on a deal, they fly to Beijing, rather than Calgary.
Still, Mr. Li's presence here gives him access to the gamut of opportunities in the Canadian oil patch.
"We just hope to have some chance to make a connection with the oil companies located in Calgary, and to make a bridge to connect Canada and China," he said. "As you know, Canada is a resource country and China has a huge market. I think if we make a bridge or a connection, that will mutually benefit both countries."
Evidence of those ambitions is scattered about Mr. Li's office, in an unmarked suite in a Calgary tower. There are portfolios of investor information on Nexterra, Oilsands Quest, N-Solv, Enerplus and Pacific BioEnergy. A huge map on the wall illustrates the ownership positions of various companies in the oil sands. A map on another wall shows the holdings of Baytex Energy Trust.
Asked about the Baytex map, Mr. Li said it is old, was put there by his predecessor, and means nothing. He also dismisses any suggestion that the other portfolios could hint at potential investments.
"You are too sensitive," he tells a reporter.
And to all those Canadian companies hoping China will swoop in, Mr. Li has a word of caution: Chinese companies are proceeding with caution.
When it comes to Canadian investments, "Chinese companies have not made a profit so far," he said. "Because the price is too high."
Future investments, he said, "will be according to the bargain and the price compared with other regions in the world."
Chinese companies have already made several multibillion-dollar investments - including the $4.65-billion (U.S.) Sinopec paid for a 9 per cent interest in Syncrude Canada, and the $1.9-billion that PetroChina paid for a 60-per-cent interest in two Athabasca Oil Sands Corp. projects. But some analysts have wondered at the prices paid. The Syncrude stake, for example, was sold for nearly $500-million more than some estimated it was worth.
Mr. Li was born in Emeishan City, in Sichuan province. His father was a power engineer. Mr. Li is an engineer, too, but he also has a degree in law and a master's in economics. He obtained the latter two while working for CNOOC, where he began as an engineer before becoming president of CNOOC Donghai Oil Corp. in 2005.
He is fully one-third of CNOOC's presence in Canada. The other two people work in technical and commercial roles, he said.
The transition to Canada hasn't been entirely easy: He shows off a new Alberta driver's licence, a learner's permit obtained after he passed a written test. He has had to begin the graduated licensing system, and said he likes Calgary for its friendliness, warmth and natural surroundings.
But while Mr. Li said he supports pipeline proposals that would allow Canada to export crude to China, he has no mandate to scout out a certain number of barrels in Canada. Though the warming of Canada-Chinese relations has been a boon to investment here, he said, CNOOC is not targeting majority stakes in Canadian companies, following an investment pattern also used by other Chinese companies.
"We can joint venture, do a working interest and we can partner. I don't think owning is a target," he said.
But he bristled at a suggestion that CNOOC's ambitions in Canada may be connected to decisions made by China's political leaders to scoop up energy around the world.
"There is really no political direction or order. We are businessmen. We are not politicians," he said. "China is focused on economic development. We really don't have any interest in politics."Report Typo/Error