Another Sign of Life in the Oil Sands

About a week ago, Imperial Oil signaled that all was not stalled in Canada's oil sands. Yesterday, a fresh face joined the fray.

PetroChina (NYSE: PTR  ) announced that it's taking a 60% interest in two projects controlled by privately held Athabasca Oil Sands. The price tag? A touch more than $1.7 billion.

This is hardly China's first brush with bitumen. Back in 2005, CNOOC (NYSE: CEO  ) bought a chunk of MEG Energy, and Sinopec (NYSE: SNP  ) more recently took a 50% stake in Total's (NYSE: TOT  ) Northern Lights project. PetroChina itself has tried to secure Canadian heavy crude supply, though it dropped its commitment to Enbridge's (NYSE: ENB  ) Northern Gateway pipeline project in 2007.

It will be interesting to see whether the Canadian government clears this deal. Like the Unocal flap here in the United States, in which CNOOC was rebuffed and Chevron (NYSE: CVX  ) kept key assets in domestic hands, Canada may play the protectionist card as well. One fund manager told me he suspects the merger between Suncor Energy (NYSE: SU  ) and Petro-Canada was motivated by fears of the former slipping into foreign hands.

With Mexican production looking perilous, Canada will likely become an increasingly important source of incremental crude supply for the United States. I wouldn't be surprised if Alberta receives some sharply worded phone calls from area code 202 (Washington).

As for the Chinese, this move follows a series of similar pushes into regions ranging from West Africa to the Middle East. The country is taking energy security matters very seriously and is systematically strengthening its import supply by the day.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.

CNOOC is a Global Gains recommendation and Total is an Income Investor pick. Dig into any of our Foolish newsletters free for 30 days.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 975694, ~/Articles/ArticleHandler.aspx, 4/18/2014 9:46:07 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement