Chinese energy giants look to Canadian gas
PetroChina and China Petrochemical, state-backed energy giants, have been in talks to buy gas from and possibly invest in Canada's first liquefied natural gas export terminal (LNG), under construction, as China seeks to diversify its sources of energy and Canada looks to reduce its reliance on the US as its main market.
The discussions have been on since a delegation of government and company officials from Canada's westernmost province British Columbia met the mainland oil firms in November to discuss possible long-term gas supply and project investment, according to Pat Bell, British Columbia's minister of jobs, tourism and innovation, who was on the trade mission. He was previously responsible for development of the province's mines and lands.
Canadian Prime Minister Stephen Harper is due to make a four-day official visit to Beijing from February 8 to 11. Energy exports are expected to be high on his agenda, which is likely to include the signing of various trade and investment co-operation agreements.
Bell said the LNG terminal's developers Apache and EOG Resources, both United States-based, and Canada's Encana had been discussing with Asian LNG importers, including PetroChina and China Petrochemical, the prospects of long-term supply of gas from the terminal under construction in the Canadian west coast city of Kitimat.
Spokesmen for the mainland energy firms would not comment.
All of Canada's gas exports went to the US last year; Canadian gas accounts for a tenth of US gas consumption. Canada is the world's third-largest gas producer, but with US gas prices at multi-year lows due to ample supply, Canada is under pressure to seek new markets.
Canada is not only rich in gas, it is also the world's third-largest holder of reserves of oil after Saudi Arabia and Venezuela, if its huge oil sands are counted.
Crude oil can be produced from oil sands, a mixture of sand, water and an extremely viscous form of petroleum, through an expensive and highly energy-intensive production process. High oil prices and new technology have made oil sands economically viable in recent years.
A pipeline has been proposed by Enbridge, a Canadian builder and operator of oil and gas pipelines, to link oil sands projects in Alberta province with the west coast, for oil to be exported to the Pacific Rim.
Mainland oil firms have spent more than this, in US dollars, on oil sands assets in Canada since 2005