BusinessCommodities
ENERGY

Sunshine Oilsands to raise C$300m with debt this year for expansion

PUBLISHED : Wednesday, 08 May, 2013, 12:00am
UPDATED : Wednesday, 08 May, 2013, 5:20am

Sunshine Oilsands, a developer of oil sands projects in Canada, plans to raise C$300 million (HK$2.3 billion) this year by issuing debt to fund expansion.

The Hong Kong and Toronto-listed firm is 30.9 per cent owned by China Petroleum & Chemical (Sinopec), sovereign wealth fund manager China Investment Corp, and the Hong Kong asset management arms of Bank of China and China Life Insurance.

It is developing the West Ells project in northern Alberta, which is expected to produce 5,000 barrels of oil daily by October. An expansion scheduled to be commissioned early next year will double output.

A recent review saw the company's expected expenditure increase by C$30 million, or 6.4 per cent, to C$496 million, and the commissioning date put back by one month.

Chief executive John Zahary told reporters after the firm's annual general meeting yesterday that higher costs to assemble equipment necessitated the revision.

He said Sunshine was doing much of the assembling in the United States to take advantage of lower costs but may outsource some assembly work for future projects to China.

Co-chairman Shen Songning said the company chose debt financing instead of issuing shares because of its low share price, which has fallen 34 per cent this year. The Hang Seng Index is down 1 per cent. The C$300 million will fund its second project, Thickwood.

The firm borrowed C$200 million from a syndicate of banks last year, which will partly fund West Ells, Thickwood and its third project, Legend Lake.

The company aims to produce 300,000 barrels per day by 2025 from the three projects, about 7 per cent of China's current output.

Sinopec has been in talks with Sunshine about forming a joint venture to develop oil sands projects, but is probably waiting for a successful commissioning of Sunshine's first production line before making a firm commitment, Zahary said.

He added that he believed a pipeline that connected Alberta to the US would eventually be approved by the US government despite environmental concerns.

He said proposed new pipelines or expansions of existing ones in Canada would provide markets for export, separate from Asian ones, even if the pipeline is rejected.

Share

 

Send to a friend

To forward this article using your default email client (e.g. Outlook), click here.

Enter multiple addresses separated by commas(,)

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive