PetroChina buys Canada shale stake from Shell

China’s largest oil company, China National Petroleum Corp., is plunging into Canada’s shale gas business with a deal to purchase 20 per cent of Royal Dutch Shell PLC’s wholly-owned Groundbirch property.

At a news conference in London on Thursday, Shell’s chief executive Peter Voser confirmed the two companies had signed “binding agreements,” but neither side would disclose the price. Reports out of Asia pegged it at $1-billion.

Shell and CNPC - known as PetroChina - have partnered in projects around the world, including the Chang Bei tight gas play in China and the 2010, $3-billion purchase of Australia’s Arrow Energy, a coal-bed methane producer.

PetroChina is also a member of a Shell-led consortium that is pursuing a liquefied natural gas (LNG) project in Kitimat, B.C., to ship gas to premium-priced Asian markets.

Shell has extensive holdings in the Montney shale gas region of northeastern B.C., and the PetroChina deal covers only its wholly-owned properties. The Anglo-Dutch super-major has projected that the Groundbirch property could be producing more than 400 million cubic feet per day by 2014, and that the resource has the potential to support 1 billion cubic feet per day.

The real foreign interests in the oilsands

If there were a global competition for the most brazen and preposterously transparent attempt by a ruling political party to change a necessary subject of national debate with alarmist distractions and hubbub, the Conservative escapade engineered in Ottawa these past few days really deserves some kind of grand prize.

First it was Prime Minister Stephen Harper himself, carrying on about some sort of conspiracy involving jet-setting American radical billionaire eco-saboteurs who are intent upon blocking Canada's vital bitumen semi-fluids by ambuscading the Enbridge pipeline hearings that began this week in the Haisla village of Kitimat on British Columbia's north coast.

Then Natural Resources Minister Joe Oliver got in on the act. "These groups threaten to hijack our regulatory system to achieve their radical ideological agenda. ... They use funding from foreign special interest groups to undermine Canada's national economic interest." A problem: when he went dredging around for evidence, Oliver came up with a two-month delay in approving some skating pond in Banff National Park. Then he tried backtracking. He'd suddenly found himself keeping company with conspiracy theorists who like making dirty insinuations about Ducks Unlimited. You had to feel sorry for the guy.

But if we're seriously supposed to be going all villagers-with-torches about foreign outfits with weird ideologies undermining Canada's national economic interests, let's review what's really going on, shall we?

The $5.5-billion Enbridge pipeline project is all about sending Alberta bitumen in huge oil tankers to China. Beijing's own state enterprises are among the project's major backers, and Beijing has been buying up Alberta's oilpatch at such a dizzying pace lately it's hard to keep up. In the spring of 2010, China's state-owned Sinopec Corp. took a $4.65-billion piece of Syncrude. Then the China Investment Corporation, which is run by the Chinese Communist Party, took possession of a $1.25-billon share of Penn West Petroleum. Last summer, the Chinese National Offshore Oil Corporation gobbled up Opti Canada for $2.34 billion. And so on.

China’s oil-sands deal will have lasting impact

Meet the new boss: Jiang Jemin, the 55-year-old chairman of China National Petroleum Corp. He’s about to become an Alberta employer.

This week, Athabasca Oil Sands Corp. triggered an option on a 2009 deal with CNPC subsidiary PetroChina, so the Chinese oil giant is not just a shareholder but also the owner and operator of the MacKay River oil sands project, to open in 2014. In December, another Chinese firm, Sinopec, closed a $2.2-billion deal for Daylight Energy Ltd.

This is new and will have a lasting impact. Chinese firms aren’t just buying stakes, they’re buying whole operations. It’s a new phase of China’s step-by-step Canada strategy. It will change not just the oil patch but Canada’s foreign policy. And a game of international energy politics is afoot in Canada’s West.

These deals are different because Canadians will see how Chinese firms operate, not just invest. They’re state-controlled companies, with executives such as Mr. Jiang who have moved among the Communist Party, government and big oil. Some fears, though not all, can now be tested; such as suggestions they will flout environmental or labour standards. They’re about to be Canadian employers, and may eventually be important ones.

It’s also a step in a strategy that’s not complete. The Chinese have tested the waters in Canada for six years, first with small deals that didn’t require government approval, then bigger deals that did, but only for part-ownership. Now it’s full ownership.

PetroChina takes full control of Alberta oil sands project

China is on the verge of taking complete control over an oil sands asset for the first time.

PetroChina International Investment Co. Ltd. (PTR-N130.786.475.20%), China’s largest state-owned energy firm, is set to buy 40 per cent of the MacKay River project from Calgary’s Athabasca Oil Sands Corp. (ATH-T12.810.322.56%), bringing PetroChina’s stake up to 100 per cent. Athabasca announced the sale Tuesday, and the pair formed a formed a joint venture on the MacKay River and Dover projects last year.

The deal does not need Investment Canada approval.

Asian energy companies and investment firms have been taking cautious steps in Canada, buying minority interests in the oil patch in their effort to convince the public and governments they are responsible corporate citizens. Canadian governments have welcomed these outsiders, but Investment Canada, which can block foreign takeovers or investments, does not have the power to rule on the deal because of the way it is structured.

Investment Canada approved PetroChina and Athabasca’s original joint venture agreement, and that review considered what would happen if PetroChina bought more of the MacKay project.