State- owned firms still in buying mood
Chinese, Polish energy companies said to be looking for acquisitions
TORONTO State- owned enterprises have not given up on the Canadian oilpatch and are scouting for acquisitions, according to two senior executives.
“We have cutback our capital program with the intention that should the right acquisition opportunities arise that we would invest in those as opposed to drillbit,” Brian Tuffs, chief executive officer of Sinopec Canada, told an investor conference in Toronto Thursday.
Sinopec is one of China’s three major national oil companies that have traditionally sunk billions around the world to ensure energy security for the world’s largest energy importer.
But a string of unfavourable international deals, including in Canada, and a corruption sweep back home has forced the major national oil and gas operators to change their strategy.
“Sinopec and Chinese SOE have shifted their focus in the last three years, perhaps from a mandate of volume to one of value,” Tuffs said. “Previously, they were focused more on volume of resource, volume of reserves.”
Through its international unit, Sinopec International Petroleum Exploration and Production Corp. ( SIPIC), the downstream giant has acquired a stake in Petronas- led Pacific NorthWest LNG project in British Columbia, bought Daylight Energy Ltd. and acquired land in the Montney basin, which together generate around 85,000 barrels of oil equivalent per day.
“We haven’t done any blockbuster deals and that’s because we haven’t found any big blockbuster deals that makes sense on a full cycle basis, “Tuffs said, noting that the buyers and sellers are still not on the same page on valuations.
Tuffs acknowledged that Sinopec learned its lessons from CNOOC’s Nexen Energy acquisition in 2013 that led to the departure of most senior Canadian personnel from the firm. Canada is Sinopec’s only international operation out of 26 that has a local CEO, CFO and COO, Tuffs said.
“The [ Chinese leadership’s] comments are that Sinopec and SIPIC are trying to break the mould for the Chinese SOE culture and try to become more international, and they view their operations in Canada as a bit of a spearhead for that internationalization.”
ORLEN Upstream Canada Ltd., the partially privatized Polish oil refiner and petrol retailer that bought Calgary- based TriOil Resources Ltd. for $ 183.7 million in 2013, is more aggressive in seeking acquisition opportunities.
“The mandate is to grow substantially in Canada, and Calgary is going to be the focus of growth. Our publicly stated capital available through to 2017 is in excess of US$ 1 billion that we can put to work, primarily in Canada,” Andrew Wiacek, president of ORLEN Upstream Canada Ltd. told the conference.
“We are focusing on unconventional resource types of plays, scalable, and that have lots of growth potential since we have a mandate to get to 130,000- 150000 boepd, within four to five years.”
The two SOE companies’ deal optimism is in sharp contrast to recent announcements by PetroChina Canada, which said in late March that it’s in talks with international oil companies to swap its Canadian Oil Sands assets. This month, state- owned South Korean Harvest Operations Corp. said it was delaying startup on its 10,000bpd thermal oilsands project.