CHINA National Petroleum Corp has become the first Chinese firm to control a Canadian oil sands project after securing rights to explore fields in Alberta province, the Ministry of Commerce said yesterday.
The largest Chinese oil and gas producer has won exploration rights from Alberta authorities for 11 fields covering a total of 258.6 square kilometers. It will take majority stake in the project, the ministry said on its Website, citing Canadian press.
It didn't specify the percentage equity for CNPC nor the potential reserves in the fields. But Shanghai Securities News quoting an unnamed CNPC official as saying it is expected to yield 220,000 barrels of crude a day eventually.
Officials at CNPC, parent of PetroChina Co, were unavailable for comment.
CNPC becomes the third Chinese state-owned energy company to invest in Canada's oil sands projects.
China National Offshore Oil Corp, the country's third largest oil firm, tapped the Alberta oil sand business in 2005 by acquiring a 16.69 percent stake in Canada's MEG Energy Corp for C$150 million (US$142.5 million).
Later, China Petrochemical Corp, the second biggest, paid C$150 million for a 40 percent stake in an oil sand joint venture with Calgary-based Synenco Energy Inc. The venture was expected to eventually produce 100,000 barrels of oil a day.
Oil sand deposits are composed of both sand and bitumen, a tar-like thick and heavy form of oil that needs processing before refineries can use it to produce gasoline and other fuels. It takes about two tons of oil sands to produce a barrel of oil.
The majority of Canada's proved crude reserves are found in Alberta's oil sands. Alberta's oil sands contain 174 billion barrels of oil recoverable with present-day technology, representing one of the world's largest oil sand reserves, according to Alberta's government.
However, oil sands projects could be uneconomic if oil prices are low because extracting crude from oil sand deposits costs more than traditional drilling.
CNPC and CNOOC have reportedly refused to join a Canadian oil sands joint venture late last year when global oil prices were falling off record highs.