China's CNOOC to buy Canadian oil

Chinese oil giant CNOOC has agreed to take over Canadian oil sands developer OPTI for about $2.1 billion, the companies said Wednesday, as China moves to secure more resources in North America. State-run CNOOC said its subsidiary CNOOC Luxembourg would make the acquisition, which is still subject to approval from Chinese and Canadian regulators. They expect the deal to be finalised in the fourth quarter. "We are pleased to expand our presence in the oil sands business after our successful investment in MEG," CNOOC chief executive Yang Hua said in a statement, referring to the 2005 purchase of a 17 percent stake in Canadian oil sands firm MEG Energy. "We believe that the upside potential of the acquired assets will benefit the shareholders of CNOOC Limited." Chinese firms have been pushing into the Alberta oil sands region in western Canada, the largest known crude deposit outside the Middle East, mostly through joint ventures and partial stakes. Oil sands are deposits of heavy oil, or bitumen, found in sand and clay. While conventional crude oil is pumped from the ground, the sticky oil must be extracted from underneath the region's coniferous forest, separated from the sand and water, then upgraded and refined. Environmentalists say oil sands extraction produces three to five times more carbon emissions than conventional oil production and requires tailing ponds that leak cyanide, oil, arsenic, copper and iron into local waterways. The main asset of OPTI is a 35-percent working interest in the Long Lake Project in Alberta, which is designed to produce 58,500 barrels of oil per day, the statement said. OPTI chief executive Chris Slubicki said the deal was in the Canadian company's "best interest". "CNOOC Limited is a technically experienced and well-capitalised company that is equipped to support further development at Long Lake and future expansions in the Canadian oil sands," Slubicki said. In May last year, China's $300-billion sovereign wealth fund agreed to invest in Canadian oil sands giant Penn West to help develop its "vast oil sands resources". In 2009, Chinese oil giant PetroChina took a $1.7 billion stake in two projects to exploit oil sands with the Canadian company Athabasca Oil Sands.