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Dover West Leduc. (Image courtesy of Athabasca Oil)
PetroChina (NYSE:PTR), the Asian country’s largest oil major by market value, no longer wants a stake in Canada’s oil sands as the ongoing collapse in crude prices has made the sector less attractive and more costly.
In a Thursday filing with the Hong Kong Stock Exchange, the company announced it was “actively engaged” in talks to swap North American assets with international oil companies, acknowledging the negotiations were mostly focused on Canada’s oil sands, which require high crude prices to be profitable.
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The move includes an almost 10% cut in exploration and production spending compared with last year, joining the rest of the industry in trimming budgets in response to slumping prices that have almost halved since last summer.
The rationale is that swapping assets would be more efficient than outright sales, which, while oil prices are low, would “cause losses for international oil companies,” Vice- Chairman Wang Dongjin said in Hong Kong yesterday at the company’s earnings briefing.
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PetroChina’s response to the collapse in oil prices follows similarly announced cuts by its rivals Sinopec Corp. and Cnooc Ltd.
“In 2015, the global economy is expected to continue to recover at a low speed, subject to some unstableness and uncertainties,” the firm said in the filing.
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The firm has operations in its home country and around the world. In Canada, it is the partner of Calgary-based Athabasca Oil Corp (TSX:ATH) from which it bought a 40% stake last year in the Dover oil sands project for $1.1 billion. Two years earlier it had paid Encana Corp. (TSX:ECA) $1.2 billion for an almost 50% stake in Alberta’s Duvernay formation.
Chinese companies invested billions of dollars in oil sands assets before Prime Minister Stephen Harper’s Conservative government imposed more stringent rules for foreign state-owned enterprises in late 2012, essentially barring bids for control of such projects.
By Cecilia Jamasmie of Mining.com
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