Chinese dragons sniff around the oilpatch
http://www.theglobeandmail.com/servlet/story/RTGAM.20070621.WBwenergyblo...
Norval Scott, 21/06/07 at 1:21 PM EDT
Blog from Globe and Mail Report on Business
Inside Energy is on the road, finding out what there is to see and do in Edmonton at the 3rd Canada-China Economic Co-operation conference, which is being billed this time around as "Energy and beyond."
There are a lot of distractions at the conference and you can sit in on panels discussing environmental and technological collaboration and even fuel cells. But there's really only one question that needs to be answered, and it's this: Is more Chinese investment coming to the oil sands, and, if so, when?
It's well known that China needs oil to fuel its booming economy, and Canada is a logical place for it to source the crude it desires. Two years ago Chinese firms caused a stir by taking minority stakes in Albertan oil sands projects, while Petrochina has an MOU to take 50 per cent of the crude that would come through Enbridge's Gateway pipeline to the Canadian West Coast, currently expected to be in service by 2014.
That investment seemed to set the scene for more substantial acquisitions by China in Canada, but the expected wave never arrived. Explanations range from a belief that China is learning the oil sands game with its minority stakes and so is happy to stand pat for now, to Canadian acquisitions being just too expensive in an inflated market.
The rationale that might make the most sense, though, is that China isn't sure if a larger investment would be allowed by Canada. In recent years, China was embarrassed when one of its national oil company's bid for Unocal, a U.S. oil company, only to have the bid scuppered by U.S. government opposition. It doesn't want something similar to happen in Canada. Signs from the government have been mixed, and lawyers in Calgary tell me they aren't sure if major investment from China's national oil companies would be allowed, even though Norwegian and Korean NOCs have taken over oil sands developments in Alberta recently.
