CNPC wins oil sands exploration rights

Jul 02, 2007 02:00 AM

CNPC, the China National Petroleum Corp, has become the first Chinese firm to control a Canadian oil sands project after winning exploration rights to the resources in Alberta. The country's largest oil producer has secured exploration rights to 11 sections with an area of 258.6 sq km.
The deal is expected to eventually yield 220,000 barrels of crude daily, is the first case of a Chinese firm taking a controlling stake in a Canadian oil sands project.

In 2005, China National Offshore Oil Corp agreed to acquire a 16.69 % stake in Canada's MEG Energy Corp, for C$ 150 mm. The later owns oil sand leases in 52 sections totalling 32,800 acres in Alberta.
Sinopec, Asia's largest refiner, also agreed to pay C$ 150 mm for a 40 % stake in a joint venture producing synthetic crude from western Canada oil sands.

Officials with the China National Petroleum Corp were quoted as saying that oil sands, which are more expensive to process than light crude, are viable as long as crude prices are above $30 per barrel. At an estimated 173 bn barrels, Canada's oil sands rank second behind Saudi Arabia in petroleum reserves at 230 bn barrels but they were long neglected due to high extraction costs.
Since 2000, however, soaring crude prices and improved extraction technology have persuaded several foreign companies to invest billions of dollars.

Source / The Economic Times
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