Exclusive | What do you do after spending HK$6.9 billion to pump your first drop of oil?
After spending HK$6.9 billion to pump its first drop of oil from its maiden oilsands project in Canada, Hong Kong-listed Sunshine Oilsands is now looking to the sun for brighter prospects.
The firm, backed by the asset management arms of Bank of China and China Life Insurance, sovereign fund China Investment Corp and China Petrochemical, parent of listed oil major Sinopec, plans to plough US$50 million into solar farms and facilities to extract underground heat to save natural gas costs in a region with harsh winters and relatively average sunlight.
With oil price trading at their lowest in almost seven years, the company is banking on a price recovery and cost savings from the deployment of renewable energy to put an end to its eight years of losses one day.
READ MORE: Sunshine Oilsands posts C$13m interim loss
“While we are starting production when oil price is at its lowest in a long while, it is an opportunity for us to use unconventional energy to cut production costs and carbon emissions,” Sunshine chairman Sun Kwok-ping told the South China Morning Post in an interview.
With the project having just started to produce oil, it plans to invest next year US$10 million on heat pumps with the capacity to generate 3.5 megawatt of electricity to generate steam of up to 150 degrees centigrade to liquefy oil sands and pump it from underground.
It also plans to spend US$40 million on 100 MW of solar farms – enough for around 40,000 Chinese households’ annual consumption – to complement natural gas-fired steam generation for the process.
Sun is Sunshine’s largest shareholder, having raised his stake from 5.9 per cent in April to 17.3 per cent stake at present. CIC owns 8.4 per cent, China Life Insurance (Group) has 7.8 per cent and China Petrochemical, 6.1 per cent.
Sun is the chairman of Shanghai-based heat-pump cooling and heating systems provider Nobao Renewable Energy Holding, 57 per cent owned by Cheng Kin-ming, the largest shareholder of Hong Kong-listed Shunfeng Photovoltaic International that acquired bankrupt Wuxi Suntech – the main subsidiary of Suntech Power, once the mainland’s largest solar power panel maker.