China keeps up its
terrific pace of resource-related deal-making with a
big investment in Canadian oil sands. It's welcome news, from the perspective of the Canadian
Globe and Mail:
A major Chinese energy company has delivered a jolt of confidence to the oil patch with a $1.9-billion investment that marks China's biggest entry into Alberta's oil sands.
In a deal that many took as proof of the oil sands' continued attractiveness to deep-pocketed investors, Calgary-based Athabasca Oil Sands Corp. sold a 60-per-cent interest in two of its undeveloped projects near Fort McMurray to the international unit of PetroChina Co. Ltd.
The Globe and Mail notes that the valuation is quite bullish:
For many, however, the Athabasca deal was notable for the value it assigned to oil sands assets, whose worth has been debated ever since Total made a hostile bid for UTS earlier this year that analysts said ascribed no value to its oil reserves. Analysts calculated that PetroChina will pay just over 60 cents a barrel for Athabasca, which marks a return to some of the valuations seen in 2007 and 2008, and implies a value for companies like UTS that is roughly double their current trading price.
Environmental Capital has a hypothesis on why China would invest, given the lack of infrastructure to pipe the crude across the monutains to the Pacific Coast, where it could be shipped to China.
In the meantime, the Athabasca projects might give PetroChina a chance to refine, as it were, its technical expertise with heavy oils—the projects will use the same technology as found in some Chinese domestic projects.
That makes sense to me - China is on a shopping spree not only for foreign resources, but also for the skills that will allow it to fully exploit its own natural endowments.
