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Providing coverage of Alaska and northern Canada's oil and gas industry
January 2007

Vol. 12, No. 4 Week of January 28, 2007

Flaherty selling China on Canadian oil

Canadian Finance Minister Jim Flaherty has given an extra prod to Chinese political and business leaders to look on Canada as a stable source of oil.

During a series of speeches and high-level meetings in Beijing, he said Canada “offers China and other nations a stable, secure and sustainable source of energy resources.”

“In an uncertain and often volatile world, Canada is a secure source of the commodities most in demand and we’re making the investments necessary to unlock the true potential our resources can offer,” he told a business audience.

He noted that China consumes 12 percent of global energy, but accounts for only 4 percent of the global economy, making it rightly concerned about future security and sustainability of the world’s energy resources.”

Flaherty said the Alberta oil sands are forecast to produce 4.6 million barrels per day by 2015 — most current predictions stop at 3.5 million bpd — while C$400 billion is expected to be invested in the Canadian energy sector over the next 8 years (projects on the table for the oil sands total about C$120 billion over 10 years).

He said there was a heavy emphasis on the potential of the oil sands during meetings with Chinese cabinet ministers and reported “significant interest” in the resource.

However, to date, only two of China’s state-owned oil companies (China National Offshore Oil Corp. and Sinopec) have minority stakes in startup oil sands projects, while PetroChina has been negotiating an anchor stake in Enbridge’s proposed Gateway pipeline which could deliver 300,000 bpd by tanker, starting in 2012-14.

The latest indications are that China is ready to provide engineering, equipment manufacturing and oil processing expertise to the oil sands, but Yingfeng Xu, an economics professor at the University of Alberta, said China is not yet convinced the oil sands can become a major global supply source and, for that reason, is not interested in taking on an operator role.

—Gary Park






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