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Chinese up investments into Canada oil sands

07-06-2012 10:22 BJT

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More and more Chinese investors are exploring opportunities in Canada's oil and gas sector, especially in the oil sands of the landlocked, western province of Alberta. But there are several challenges now, including a logistical one: how to physically get the natural resources to the Asian markets.

Oil sands, Alberta, Canada’s fourth-largest province, has loads of them.

They are loose sand and rock material containing bitumen, a dense and extremely viscous form of crude oil. The bitumen must first be removed from the sand and can then be upgraded into crude oil and other petroleum products. Alberta’s oil sands have been described as "Canada’s greatest buried energy treasure", and have seen increasing interest from Chinese firms.

Alison Redford, premier of Alberta, Canada, said, "We have the oil sands in Alberta, which is a tremendous reserve in the world, the third-largest reserve of oil. And we have through that the opportunity to invest into tremendous technologies and we’ve seen investors from China invest in entire companies, taking equity interest in existing companies, building infrastructure projects, and we want to nurture that."

The province is expecting output from its oil sands to more than double by 2021, reaching a production level of 3.7 million barrels per day. The production increase will also come on the back of new projects planned by companies such as Suncor Energy, Total, and PetroChina.

Reporter: "Chinese state-owned firms have invested more than 16 billion US dollars in Canadian energy over the past two years. Sinopec for example has a stake in a proposed Canadian pipeline to the Pacific Ocean. With the pick-up in outbound direct investments from China, Chinese investments in Alberta’s oil sands are likely to rise gradually."

Foreign direct investment in Canada rose by 3.8 percent to 614 billion US dollars in 2011 from 2010, official data showed, boosted by interest from the United States and Europe. But their position might soon be contested by China, the world’s second largest economy.

Wang Jianye, chief economist with Export-import Bank of China, said, "If you look at the numbers, there is a big pick-up in the trade numbers. The reason for that is the structure of the Chinese economy and that of Canada. Canada is a developed country with a lot of natural resources, and China is a developing country with a rapidly expanding market."

But the oil sands are not without tradeoffs. Environmental concerns about extraction and fears of oil spills in Canada are just some of them. And there are others.

Derek Holt, vice president of Scotia Economics, ScotiaBank, said, "One of the big challenges is infrastructure. Right now Canada can only drill 100,000 bpd of oil into Asian markets. Now we are developing greater capacity to put more oil into Asian markets through 2 pipelines that are being proposed that will take more output to the West Coast."

Taking all the factors into account, Chinese companies need to carefully balance the pros and cons of investing in Canadian oil sands.

 

Editor:Zhang Rui |Source: CNTV.CN

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