PetroChina invests in Canadian oil sands

PetroChina has agreed to buy a 60 percent stake in two Canadian oil sands projects for $1.7 billion.  The Chinese state-owned firm, which is AsiaÔÇÖs largest oil and gas operation, bought the holdings from Canadian firm Athabasca Oil Sands (AOSC). The MacKay River and Dover fields, located in northern Alberta, hold a combined five billion barrels of oil.┬á AOSC aims to file a regulatory application for an initial 35,000 barrels per day from the MacKay River project by the end of the year.┬á The cost of extraction from oil sands is relatively high, as separating the oil from the sand is both energy- and labor-intensive. When oil prices are depressed, therefore, the process is not cost-effective.┬á┬á "Oil sands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market,ÔÇØ said Bill Gallacher, chairman of AOSC. ┬á ÔÇ£AOSC therefore decided to look for joint venture partners, and these strategic joint venture arrangements with PetroChina, one of the world's largest energy companies, can ensure that the MacKay River and Dover projects will be developed in timely manner, which is excellent news for Alberta and the rest of Canada.ÔÇØ┬á AOSC is currently the largest leaseholder in the region, with around 530,000 hectares of land. ┬á With an estimated 173 billion barrels in total, AlbertaÔÇÖs oil sands hold the worldÔÇÖs second-largest crude reserves behind Saudi Arabia.┬á ChinaÔÇÖs interest in oil sands has been increasing of late. In February, China National Petroleum made a $449-million deal for Verenex Energy; and last year, Sinpoec bought Calgary-based Tanganyika Oil for $2 billion.┬á * ┬á┬á┬á┬á┬á┬á┬á*┬á┬á┬á┬á┬á┬á┬á *