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Chinese state oil firm buys Canadian oil sands producer | Chinese state oil firm buys Canadian oil sands producer |
(about 4 hours later) | |
Chinese state oil company CNOOC has agreed to buy Canadian oil sands producer OPTI for $2.1bn (£1.3bn). | Chinese state oil company CNOOC has agreed to buy Canadian oil sands producer OPTI for $2.1bn (£1.3bn). |
The deal - which must be approved by regulators - is the latest move by state-run Chinese firms to buy stakes in North American oil producers. | The deal - which must be approved by regulators - is the latest move by state-run Chinese firms to buy stakes in North American oil producers. |
Canada's Alberta province is believed to have the third-largest reserves of oil in the world. | Canada's Alberta province is believed to have the third-largest reserves of oil in the world. |
However it is far more expensive to extract oil from Canada's oil sands than from conventional fields. | However it is far more expensive to extract oil from Canada's oil sands than from conventional fields. |
CNOOC says it will pay OPTI shareholders $34m, but will also take on the firm's $2bn worth of debt. | CNOOC says it will pay OPTI shareholders $34m, but will also take on the firm's $2bn worth of debt. |
The firm's main asset is a 35% stake in the Long Lake oil sands project in Alberta. | The firm's main asset is a 35% stake in the Long Lake oil sands project in Alberta. |
OPTI says the deal will allow it to continue to invest further in the project. | OPTI says the deal will allow it to continue to invest further in the project. |
"CNOOC is a technically experienced and well capitalised company," said OPTI chief executive Chris Slubicki. | "CNOOC is a technically experienced and well capitalised company," said OPTI chief executive Chris Slubicki. |
China expansion | China expansion |
The International Energy Agency (IEA) predicts that in the next five years almost half of global oil demand growth will come from China. | The International Energy Agency (IEA) predicts that in the next five years almost half of global oil demand growth will come from China. |
Rising demand for oil and significant cash reserves have led Chinese energy firms to buy into foreign oil reserves. | Rising demand for oil and significant cash reserves have led Chinese energy firms to buy into foreign oil reserves. |
"We are pleased to expand our presence in the oil sands business," said CNOOC chief executive, Yang Hua. | "We are pleased to expand our presence in the oil sands business," said CNOOC chief executive, Yang Hua. |
In 2005 the firm bought a 17% stake in Canadian oil sands firm MEG Energy. CNOOC has also obtained minority stakes in oil projects in Texas and Colorado. | In 2005 the firm bought a 17% stake in Canadian oil sands firm MEG Energy. CNOOC has also obtained minority stakes in oil projects in Texas and Colorado. |
CNOOC is not the only Chinese state oil firm investing in the region. | CNOOC is not the only Chinese state oil firm investing in the region. |
In 2009 PetroChina bought a $1.7bn share in Athabasca Oil Sands, and Last year Sinopec paid $4.6bn for a 9% share of Syncrude, Canada's largest oil sands producer. | In 2009 PetroChina bought a $1.7bn share in Athabasca Oil Sands, and Last year Sinopec paid $4.6bn for a 9% share of Syncrude, Canada's largest oil sands producer. |
The IEA estimates that by the end of 2010 Chinese state energy companies operated in 31 nations and held shares in oil firms in 20 of those countries. | The IEA estimates that by the end of 2010 Chinese state energy companies operated in 31 nations and held shares in oil firms in 20 of those countries. |
Environmental concerns | Environmental concerns |
Environmentalists have criticised extracting oil from sand and clay which leads to higher carbon emissions than conventional production. | Environmentalists have criticised extracting oil from sand and clay which leads to higher carbon emissions than conventional production. |
Such concerns may affect demand for crude from oil sands in the US and Europe where new environmental regulations are planned. | |
California recently announced new low-carbon fuel standards and plans for a new pipeline from Alberta to Texas have been delayed. | California recently announced new low-carbon fuel standards and plans for a new pipeline from Alberta to Texas have been delayed. |
Most oil from Alberta is currently exported to the US. | Most oil from Alberta is currently exported to the US. |
However a second proposed pipeline would take oil to Canada's pacific coast making it easier to export to China instead. | However a second proposed pipeline would take oil to Canada's pacific coast making it easier to export to China instead. |
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