China’s state-held oil majors are staying in Canada’s oil sands despite challenges in production growth, unlike major European and U.S. firms that have bailed out of the higher-cost Canadian oil patch.
The three giant Chinese oil companies—PetroChina, CNOOC, and Sinopec—tell Dan Healing of The Canadian Press that they are committed to their Canadian operations, while analysts say that the Chinese energy behemoths can afford to not make too much profit from their Canadian operations. The Chinese majors can afford to operate in the capital intensive and not spectacularly profitable Canadian oil patch, Jia Wang, deputy director of the China Institute at the University of Alberta, told The Canadian Press.
The Chinese oil majors want to stay and develop their operations in Canada despite some operational difficulties. This approach is in contrast to the exodus of oil supermajors from Canada’s oil sands in 2017, when large oil companies sold their oil sands operations or parts of them to Canadian operators.
In 2017, Shell sold oil sands interests to Canadian Natural Resources for around US$8.5 billion, as part of its strategy to focus on free cash flow and higher returns on capital, and prioritize businesses such as integrated gas and deep water. The same year, ConocoPhillips announced the sale of oil sands assets in Canada to Cenovus in a US$13.3 billion deal, while Norway’s Statoil—now Equinor—sold its entire oil sands operations in Alberta to Athabasca Oil Corporation.
This year, the exodus continued, with U.S. Devon Energy selling its Canadian business to Canadian Natural Resources as part of its plan to focus on growing its oil production in the United States. Koch Industries is also understood to have sold its oil sands assets to Canadian Cavalier Energy.
But PetroChina, CNOOC, and Sinopec are staying in Canada, and Wang thinks they won’t back out any time soon.
“PetroChina Canada is committed to Canada for the long-term, having maintained its investments through economically challenging times,” spokesman Davis Sheremata told The Canadian Press in an emailed statement.
CNOOC spokesman Kyle Glennie also told The Canadian Press the company remains committed to its oil sands operations.
By Tsvetana Paraskova for Oilprice.com
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