By Bloomberg News
(Bloomberg) — PetroChina Co. (857) won the approval of the Canadian government for its C$1.9 billion ($1.8 billion) bid to buy a stake in two Alberta oil-sands projects, its biggest North American acquisition.
The purchase by China's largest oil company of a 60 percent share in Athabasca Oil Sands Corp.'s MacKay River and Dover oil- sands projects "is likely to be of net benefit to Canada," Industry Minister Tony Clement said in a statement yesterday.
Chinese oil companies have spent at least $13 billion on overseas assets since December last year as they take advantage of lower valuations caused by the economic slowdown. PetroChina has said it plans to boost acquisitions after paying at least $3.6 billion this year to buy Singapore Petroleum Corp., a stake in a Nippon Oil Corp. plant and a venture in Kazakhstan.
"Upstream crude oil assets that are for sale are hard to come by now, especially the big ones, so they can try to buy oil-sands projects," Grace Liu, an analyst with Guotai Junan Securities Co., said by telephone from the southern Chinese city of Shenzhen. "It's part of their strategy to expand overseas and diversify their portfolio."
The transaction was initially scheduled to close on Oct. 31 after PetroChina agreed on Aug. 31 to acquire control of the oil-sands projects. Canada was still reviewing the investment, the National Post reported on Dec. 19, citing Clement.
"To successfully compete in a globalized economy, we need to attract international investment, which can create jobs, raise our level of competition, and develop Canada's long-term economic prospects," Clement said yesterday.
PetroChina has risen 37 percent in Hong Kong trading this year, lagging behind the 49 percent gain in the benchmark Hang Seng Index. The stock fell 0.5 percent to HK$9.29 at 10:05 a.m.
PetroChina will provide funding for future extractions of oil sands under the deal, Athabasca, a closely held company based in Calgary, said on Aug. 31. PetroChina may deploy methods it has used in northeastern China heavy-oil projects to unlock oil trapped in Alberta sands, Athabasca said.
"Development costs for oil sands are usually high, so it's hard to tell now the value of the projects," Liu said.
Liu Weijiang, a Beijing-based spokesman for PetroChina's parent, China National Petroleum Corp., couldn't be immediately reached on his office and mobile phones for comment today.
China National Petroleum said on Oct. 19 that PetroChina will focus on expanding exploration and boosting overseas cooperation next year as China's energy demand rises.
The company said on Sept. 9 that it will receive a $30 billion loan from state-run China Development Bank to fund overseas expansion as China steps up its hunt for oil and gas resources.
Oil consumption in China, the world's second-biggest energy user, doubled in the last decade to 8 million barrels a day in 2008, according to BP Plc's Statistical Review.
To contact the reporter on this story: Baizhen Chua in Beijing at firstname.lastname@example.org
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