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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (20435)	10/21/2004 5:22:24 PM
From: ild	Respond to of 110194

CALGARY and LETHBRIDGE -- Sinopec Corp., the giant state-owned Chinese energy firm, is conferring with Beijing about buying into Alberta's oil sands sector, Premier Ralph Klein said yesterday. Speaking in Lethbridge, Mr. Klein said officials with Sinopec have talked with four major oil sands players -- Canadian Natural Resources Ltd., Shell Canada Ltd., Syncrude Canada Ltd. and Suncor Energy Inc. -- as well as the province's energy department. Now, Mr. Klein said, the company and China are mulling the prospect of a direct investment in the oil sands. (Although publicly traded, the company's majority owner is the Chinese government.) "They've gone back to China to talk to officials in their head office -- which is really the government because all the oil companies are owned by the government -- to make a determination as to whether they're going to invest." Last week, The Globe and Mail reported that Sinopec was interested in buying a stake in an existing oil sands venture, or setting up its own stand-alone project, an investment that could run into the billions of dollars. The Sinopec delegation expressed several concerns during their visit, Mr. Klein noted, most notably about whether the province's labour pool can keep up with the development demands of the oil sands. The group also remarked on the future direction of commodity prices as a worry, he added. The Premier's comments come as Canadian Natural enters the final stages of its debate over whether and how it should proceed with its Horizon oil sands project. Company president John Langille said last month in Toronto that a partner could be, but does not need to be, part of Horizon. Sources say Canadian Natural's board will decide whether to proceed with Horizon in early November -- including a determination on whether a partner should be brought on board for the $8.5-billion project. Publicly, the company has only said it will decide by the end of the year. The company could not be reached for comment yesterday. A delegation from another state oil firm, PetroChina, met with officials from Canadian Oil Sands Trust in the late summer, Marcel Coutu, the trust's president and chief executive officer, said yesterday. The discussions centre on the possibility of a long-term agreement to ship oil to China, rather than PetroChina acquiring a stake in the trust, Mr. Coutu said. Canadian Oil Sands is the largest shareholder in the Syncrude joint venture, the oldest oil sands project. The PetroChina team included engineers and senior staff, he said. The Chinese company is now evaluating how well its refineries would be able to process Syncrude's synthetic crude. "The ball's in their court," Mr. Coutu said. He said he believes it "possible" rather than likely that China will acquire ties to the oil sands, whether through a supply agreement or outright ownership of part of a project. But he said that there should be no uncertainty at all that Beijing is looking to ensure that its growing economy has reliable access to energy imports. "Their interest in supply is serious. I don't think there's any doubt about that." Mr. Coutu said the most obvious barrier to Chinese investment is the lack of a pipeline to carry the output of the oil sands to a Pacific port, and suggested that the state oil companies may be interested in helping to finance one of the pipeline projects in the works. Last week, Mr. Klein said the Chinese had mentioned the proposal by Enbridge Inc. to build a pipeline to Prince Rupert, B.C., as a way to get crude to their country. Enbridge had no comment. The company's plans call for a pipeline with a capacity of 400,000 barrels a day to begin transporting oil as early as late 2009.