Vancouver Sun

State-owned companies still like Canada

But the firms are more selective of their buys, focusing on value rather than volume

- YADULLAH HUSSAIN

State-owned enterprise­s have not given up on the Canadian oilpatch and are scouting for acquisitio­ns, according to two senior executives.

“We have cut back our capital program with the intention that should the right acquisitio­n opportunit­ies arise that we would invest in those as opposed to drill bit,” Brian Tuffs, chief executive of Sinopec Canada, told an investor conference in Toronto on 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 the 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.

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.

“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 partly privatized Polish oil refiner and gasoline retailer that bought Calgarybas­ed 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 $1 billion US 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 130,000150000 boepd, within four to five years.”

The two SOE companies’ 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 oilsands assets. This month, state-owned South Korean Harvest Operations Corp. said it was delaying start-up on its 10,000-bpd thermal oilsands project.

“Them and ate 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 ine xcess of $1billion US that we can put to work, primarily in Canada. ANDREW WIACEK PRESIDENT OF ORLEN UPSTREAM CANADA LTD.

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