Alberta to Win Chinese Oil-Sands Investment, Minister Says

Alberta, the Canadian province that’s home to the world’s third-largest oil reserves, will likely win investment from Chinese and other Asian companies as they seek energy security, Energy Minister Ron Liepert said.

“You’ll continue to see them strategically invest in minority stakes in companies in order to have some skin in the game,” Liepert said in an interview today at Bloomberg headquarters in New York. The companies also want to invest in Alberta “to learn and, in their mind, provide them with some long-term security” of energy supply, he said.

Chinese companies including PetroChina Co. have purchased Canadian energy assets as they search for new resources to feed growing domestic demand. PetroChina paid C$5.44 billion ($5.57 billion) in February for a 50 percent stake in Encana Corp.’s natural-gas assets in western Canada. China Petrochemical Corp. paid $4.65 billion last year to buy a stake in Syncrude Canada Ltd., which produces bitumen from Alberta oil-sands projects.

Alberta is estimated to have 173 billion barrels of oil reserves, ranking it behind Saudi Arabia and Venezuela, according to the Canadian Association of Petroleum Producers. Most of the reserves are in sandy deposits that require heat, steam or chemicals to separate the bitumen.

Total investment in the oil sands may reach C$15 billion this year from C$13 billion in 2010, according to the association.

‘Hunting for Partners’

“There a number of companies who have major oil-sands expansion plans in process and are out hunting for partners,” Liepert said.

China Investment Corp., the nation’s $300 billion sovereign wealth fund, plans to move a managing director to Canada to bolster investment bids for natural resources assets, a company official with direct knowledge of the matter said.

Liepert said technological advances may increase production of oil faster than the targeted 3 million barrels a day by 2020 from 1.5 million barrels now.

“The advancement of technology has been so incredible that it’s hard to predict even five years out,” he said. The 3- million-barrel estimate is “low.”

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.

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