Calgary Herald
CALGARY -- China is getting a frosty reception in its bid to become a major player in Alberta's oilsands, officials from the country's state-owned oil company said Thursday.
Song Yiwu, vice-president of the China National Oil and Gas Exploration and Development Corporation the international wing of the Chinese National Petroleum Corp. (CNPC) told a TD oilsands conference his company is looking to secure a minimum of 200,000 barrels per day (bpd) from Canada as part of his country's efforts to diversify oil supplies from around the globe.
However, he complained that Canadian firms have been reluctant to enter into joint ventures.
"We want to work together," he said, "but to us, it looks like you're not interested."
Rather than simply buy oil, Yiwu said CNPC wants a direct equity stake in a production venture.
"We're looking for a long-term partner," he said.
Canada currently produces 1.1 million bpd of bitumen and synthetic oil, a figure that is expected to rise to 3.1 million bpd by 2015. Suncor Energy Inc., the country's largest oilsands producer, currently turns out about 275,000 bpd.
Yiwu envisions partnerships to produce and ship raw bitumen to refineries on the Chinese mainland.
In exchange, China is offering preferential access to its markets, but Yiwu complained that Canadian companies prefer to stay closer to home.
"We think it's a good offer for you, but you don't want to buy it."
CNPC has been talking with Canadian companies about the possibility of forming partnerships for the past two years.
Although Yiwu was reluctant to name names, possible cohorts include some of the largest domestic players in town: Husky Energy Inc., EnCana Corporation and Canadian Natural Resources Limited.
"We want to do something in Canada," he said. "The bigger the better.
"We want to diversify our import channels, and oil from Canada is an option for us. We think you need a market, and we are a big emerging market."
CNPC's 200,000-bpd target jibes with a $2.5-billion memorandum of understanding PetroChina International Co. signed with Enbridge Inc. in April of 2005 to backstop the Gateway export link to Kitimat, B.C.
That agreement guarantees a base volume to cover capital commitments to build the line.
Richard Bird, Enbridge's vice-president of liquids pipelines, confirmed Enbridge is preparing a regulatory application for the Gateway project, which is expected to come into service by 2011.
Bird said Enbridge is willing to help CNPC source oil for the pipeline, but noted the company's preference to gain a direct stake in production.
"At the moment, their focus has been to secure an equity position in an oilsands project. We are still willing to work with them as a go-between to try to arrange mutually agreeable terms."
Dr. Wenran Jiang, director of the University of Alberta's China Institute, said it's in Canada's interest to engage China.
"China is coming it's the reality. The issue is, how do we work with China We should work with China together to help solve their problems and benefit ourselves at the same time."