China Digs Deeper Into Canadian Tar Sands During Durban Talks

By Brad Johnson
Think Progress
December 3, 2011

Although China boasts of its green progress, the booming nation is also making major bets on North and South American tar sands, one of the most carbon-intensive fuels on the planet. This play for civilization-threatening energy comes even as the world’s nations jockey over the fragile international climate accords in Durban, South Africa:

On Monday, China National Offshore Oil Corp (CNOOC) closed its acquisition of bankrupt Canadian tar sands producer OPTI Canada Inc. CNOOC gets OPTI’s 35 percent working interest in Long Lake and three other project areas located in the Athabasca region of northeastern Alberta, split with Canadian operator Nexen Inc. The deal cost $34 million for OPTI stock and $2 billion in debt. [Reuters]

On Wednesday, CNOOC and Nexen formed a joint venture, giving CNOOC a 20 percent working interest in the Kakuna, Angel Fire, and Cypress deepwater exploration wells in the Gulf of Mexico. [BusinessWeek]

These dirty investments in North American fossil fuel projects are just the latest in a rapid string of deals to give China access to high-polluting carbon energy from the Americas. Over the last three years, China-owned companies have invested over $18 billion in tar sands, shale gas, and coal projects in Canada and Venezuela:

November, 2011: China signs a $6 billion deal with Venezuela to develop tar sands — $4 billion to the Chinese-Venezuelan tar sands company Sinovensa to increase production from 118,000 barrels a day to 1.1 million barrels a day in 2014, and $2 billion to Venezuela’s state-owned oil company Petroleos de Venezuela for refining projects, drills, and equipment. [Channel News Asia]

October, 2011: Sinopec spends $2.2 billion to acquire shale gas producer Daylight Energy, which controls 300,000 acres of oil and gas property, at a 70 percent premium. [Bloomberg]

May, 2010: China Investment Corporation spends $1.25 billion on Alberta tar sands — $817 million for a 45 percent stake in the Peace River tar sands project owned by Penn West Energy Trust, and $435 million for a 5 percent interest in the company. [Penn West Energy]

April, 2010: Sinopec spends $4.65 billion to buy ConocoPhillips’ 9 percent stake in tar sands producer Syncrude Canada. [New York Times]

February, 2010: PetroChina spends $1.73 billion to purchase 60 percent of AOSC’s MacKay River and Dover tar sands projects. [CRI]

July, 2009: China Investment Corporation spends $1.5 billion to purchase 17 percent of Teck Resources, Canada’s largest metallurgical coal and copper mining company. CIC was recently granted a seat on Teck’s board of directors. [China Daily]

In 2005, PetroChina and Enbridge signed a $2 billion deal to help the Canadian tar sands company develop the Northern Gateway Pipeline, a project intended to deliver 400,000 barrels of tar crude a day from Edmonton, Alberta to the British Columbia port town of Kitimat, giving China access to direct tar sands shipping.

The pipeline has been unbuilt for years, facing stiff opposition and economic challenges. This Friday, Gitxsan First Nation announced it would become “the first aboriginal partner” for the pipeline. On Thursday, 130 native groups in Western Canada pledged to block the project. Enbridge has offered up to a 10 percent stake in the pipeline to first nations who sign on