Friday 28 January 2005

China, Canada Agree on Oil, Uranium Development

China and Canada signed agreements in Beijing today to help develop uranium mines and oil reserves, including Canada's oil sand deposits in Alberta, to expand trade between the two countries.

The agreements followed meetings between Chinese Premier Wen Jiabao and Canada's Prime Minister Paul Martin. Canada's Martin and Trade Minister James Peterson are on a six-day visit to China with representatives of 250 Canadian companies to boost commercial ties with its second-largest trading partner.

"Canada and China have decided to work together to promote cooperation in the oil and gas sector, including Canada's oil sands, as well as in the uranium resources field," the two governments said in a statement. No specifics were given on companies that may be involved, and details of the agreement weren't available on a Web site for Canada's prime minister.

Companies including Exxon Mobil Corp., Royal Dutch/Shell Group and Canadian Natural Resources Ltd. plan to spend billions during the next decade to develop Alberta's unconventional oil deposits as demand for crude rises and output from existing fields decline. Oil-sands output in Alberta may double to 2 million barrels a day by 2013, according to a presentation last week by Enbridge Inc.

Economics, not today's agreements, will decide whether China becomes an investor in the oil-sands projects, said Mike Tims, chairman of Peters & Co., a Calgary brokerage specializing in oil stocks.

"I wouldn't say that anything in this agreement is likely to cause anyone to do anything that isn't fully sensible on a commercial basis,"' Tims said in a telephone interview.

Enbridge, Canada's second-biggest pipeline company after TransCanada Corp., said last week that PetroChina Co. or China Petroleum and Chemical, the country's two biggest oil companies, will agree by next month to buy oil from Alberta oil sands to meet growing energy demand in China. Calgary-based Enbridge is proposing a C$4 billion ($3.25 billion) pipeline to export Alberta's oil to California, China and other markets

Shares of Calgary-based Husky Energy Inc. rallied in November after Toronto's Globe and Mail said China was negotiating to take control of the producer through a state oil company. Chinese buyers may be attracted to Husky because it is developing two oil-sands projects, some analysts have said.

Full story...