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Page added on September 1, 2009

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Chinese Oil Giant Buys Into Canadian Oil Sands

With a $1.7 billion deal to acquire a majority stake in Canada’s Athabasca Oil Sands Corp, PetroChina made its biggest investment in Canada, which has the world’s second-largest oil reserves. The oil sands that PetroChina plans to exploit are estimated to contain as many as five billion barrels of reserves.

Athabasca Oil Sands Corp said Tuesday that it had signed a series of agreements with PetroChina in which the Chinese oil giant will acquire 60% stakes in Athabasca’s MacKay River and Dover oil sands projects for 1.9 billion Canadian dollars ($1.7 billion).
To further help the Canadian oil sands company develop the projects, PetroChina, the world’s second-largest oil company by market value, also promised to provide certain financing arrangements for its partner.

“Oil sands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market,” said Bill Gallacher, Chairman of Athabasca Oil Sands Corp, adding the strategic joint venture arrangements with PetroChina can ensure that the MacKay River and Dover projects will be developed in timely manner supported by Chinese capital.

Despite its aggressive expansion strategy overseas, the state-controlled PetroChina has until now been shut out from the resources markets of western countries on national security concerns. Investing and exploring the less popular oil sands, which requires huge up-front capital expenditure, may help PetroChina get through regulatory hurdles.

Forbes



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