PetroChina has agreed to pay Encana C$1.18 billion (HK$9.3 billion) for a 49.9 per cent stake in an Alberta, Canada, shale formation as Asia's biggest oil producer steps up acquisitions of overseas energy assets.
PetroChina would also pay C$1 billion over four years to fund development of the project, Encana said yesterday.
The accord follows PetroChina's agreement this week to pay US$1.63 billion for a stake in the Browse liquefied natural gas venture in Australia.
The two deals more than double PetroChina's spending on overseas assets this year, and come less than a week after Canada approved the US$15.1 billion takeover of Nexen by rival CNOOC. The state-owned company wants half its oil and gas output to come from overseas by the end of the decade.
"It seems obvious that they were waiting for the government approval for Nexen so they could get clarification of the rules surrounding state-owned ownership," said Eric Nuttall, a portfolio manager who oversees C$100 million at Sprott Asset Management in Toronto.
The deal is the first between Canada and a state-owned company since Canadian Prime Minister Stephen Harper unveiled new foreign investment rules on December 7.
The rules, announced after the approval of CNOOC's purchase of Nexen, prohibit state-owned enterprises from taking control of Canadian oil-sands businesses unless there are "exceptional circumstances".
Joint ventures and minority stake acquisitions are not barred under the rules.
Canada was deciding whether the deal would be reviewed, said Margaux Stastny, a spokeswoman for Industry Minister Christian Paradis.
"Due diligence is being exercised by reviewing details of the proposed investment to determine if it is reviewable," Stastny said. "There are circumstances in which control is deemed to be acquired even where a minority ownership interest is involved."
It's the first time Encana has announced a deal with PetroChina since a C$5.4 billion agreement to develop the Calgary-based company's Cutbank Ridge acreage collapsed in June last year.
Encana's chief executive, Randy Eresman, said the deal was not "held up" by the development of Canada's new rules, although he consulted with the federal government to make sure the venture would be allowed.
Excluding the Encana agreement, Chinese companies have announced US$27 billion of oil and gas acquisitions this year, the most since at least 2007.
PetroChina is planning to invest at least US$60 billion this decade in global oil and natural gas assets and is looking at ventures in Central Asia, east Africa, Australia and Canada.