CNPC wins right to work oil sands in Alberta
China National Petroleum Corp, parent of Hong Kong-listed PetroChina, has won its first licence to develop oil-sand fields in Canada, in the process becoming the first mainland oil company to garner a controlling interest in such a project.
CNPC recently won a mineral rights auction to mine the tar-like extra-heavy crude oil in Alberta province covering 258.6 square kilometres, Shanghai Securities News reported, citing an unidentified international business development head. The project could reach 220,000 barrels of daily output and would be profitable as long as crude oil price exceeded US$30 a barrel, the person was quoted as saying. No production timetable or investment plan was given.
CNPC's spokesman was unavailable for comment yesterday.
Canada's National Post last week reported that CNPC would be developing the project independently. It quoted CNPC's external relations director Zhang Xin as saying that the land involved was estimated to contain close to two billion barrels of bitumen.
The highly viscose substance is expensive to process into normal fuel, since it needs to first be turned into light, synthetic crude oil before being refined further for general use.
CNPC's foray comes two years after rival CNOOC, China's dominant offshore oil producer, spent C$150 million (HK$1.11 billion) on a 16.69 per cent stake in MEG Energy, another Alberta oil sand project developer. China Petrochemical, parent of listed China Petroleum & Chemical Corp (Sinopec), also bought in the same year 40 per cent of the Northern Lights oil sand project in Alberta for C$105 million.
CNPC has signed a memorandum of understanding in 2005 with Alberta-based pipeline operator Enbridge to build a US$2 billion, 400,000 barrels-a-day pipeline to move oil sand-derived crude oil from Alberta to the west coast of Canada. It was envisioned that up to half of the capacity would carry crude destined for China via tankers.