Suncor, Total in spat over cost of project
Suncor Energy Inc.’s dispute with French oil major Total S.A. over costs at the nearly completed, $17-billion Fort Hills oilsands mine marks a new twist in the hasty departure of international oil companies from the Alberta deposits.
The French company — which in its early days spared no expense nor quarrel to get its hands on oilsands assets — is now refusing to pay its bills for the nearly finished project, whose capital cost was revised to a range of $16.5 billion to $17 billion in February, from $15 billion when it was sanctioned.
“There has been one recent development in the Fort Hills project that is a little disappointing,” Suncor CEO Steve Williams said in a conference call with analysts Thursday to discuss second quarter results.
“Our partner Total has chosen not to approve or provide additional project sanction funding for Fort Hills project, and as a result we are now in the early stages of a commercial dispute with Total,” Williams said. “Given the fact that construction is now 92 per cent (complete), as of the end of July, we are not anticipating that this issue will impact the plan to achieve first oil by the end of the year.”
For its part, Total said it was not ready to accept the substantial cost increases. Total’s chief financial officer, Patrick de la Chevardiere, told analysts in a conference call Thursday that it was in discussions with Suncor to reduce costs. Suncor spokeswoman Sneh Seetal explained the latest dispute is about the capital cost increase.
The French company has been trying to reduce its oilsands exposure since oil prices collapsed three years ago. In 2015, it sold a 10 per cent interest in Fort Hills to Suncor for $310 million. It’s been widely rumoured that it wants to get out of the remaining 29.2 per cent.