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thepeel
Joined: 08 Aug 2004
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 Posted: Thu Jul 12, 2007 6:02 pm Post subject: China National Petroleum abandons Canadian energy strategy |
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CALGARY -- China has abandoned its Canadian energy strategy out of frustration with federal policy and with the country's oilsands producers, turning its attention instead to "friendly Venezuela" as a way to feed new Chinese refineries.
A senior executive with state-owned China National Petroleum Corp. (CNPC), Asia's largest company, said CNPC has scrapped its involvement in a $4-billion Gateway pipeline project with Enbridge Inc. that was to move oilsands crude from Alberta to the British Columbia coast by about 2014.
Yiwu Song, vice-president CNPC International, also said China decided in January to "slow down" its involvement in the Canadian oilsands business.
"We're waiting for better investment policies and political-friendly opportunities coming in the future," Mr. Song said outside a TD Newcrest oilsands forum in Calgary.
He said during the next five years, China's imports of heavy oil from Venezuela will grow to 600,000 barrels a day, volumes that will be used to feed two new upgraders, refining-like facilities that process heavy grades of oil such as those found in Venezuela and in Canada's oilsands, into refinery-ready feedstock.
CNPC had hoped Canada would some day account for half those volumes, although Mr. Song voiced frustration at the same investor event a year ago about his company's lack of success in executing any significant deals.
The integrated oil company wanted to exchange access to its refining capacity and Chinese markets for reserves and upstream production.
Canada's loss -- its chance to develop new oil markets outside of the United States -- is Venezuela's gain, Mr. Song said yesterday.
"Fortunately, Venezuelan President [Hugo] Chavez is so warm-hearted -- there's a difference in attitude," he said of the political strongman in Venezuela, a country from which oil companies are now fleeing.
"Yes, there are some ideological issues here, and if your people don't change your minds and be more inviting to us ...
"China will always open its door for Canada."
He said China tipped its hand about a growing wariness of Canada in January, surprisingly via CNPC's purchase of 258.6 square kilometres of oilsands acreage, land CNPC said could hold two-billion barrels of resource.
"The media here said it was the Chinese coming. But actually, that was the turning point of our policy," he said, adding those lands would not produce oil for at least 10 years .
He blamed the Stephen Harper government for not doing more to facilitate Chinese-Canada trade in energy and also said the Liberal government of Paul Martin was more inviting to the Chinese.
Canada's Natural Resources Minister Gary Lunn, a speaker at the same oilsands forum, said Ottawa is doing its bit to encourage trade between in energy between the two countries.
Mr. Song was also critical of how long it takes getting approvals for major projects in Canada, suggesting that is why CNPC has decided it will not pursue the Gateway pipeline project with Enbridge, which at one point said it wanted equity partners to share up to 50% of the project.
PetroChina -- a CNPC subsidiary -- was going to be the primary customer for oil shipped on the line and Enbridge was going to facilitate supply deals between it and Canadian producers.
Canadian producers have so far done deals in the United States and last year Enbridge deferred building the project so it could focus on ways to move growing output from the oilsands south.
Enbridge spokesman Glenn Herchak said the Calgary-based pipeline company had not heard before yesterday that CNPC was no longer interested in pursing Gateway.
"The memorandum of understanding we signed with PetroChina did lay the groundwork for further discussions to move the project forward, but we've always said the details were confidential," Mr. Herchak said.
"While China could be a market for Gateway volumes, other Asia Pacific markets and California are other potential markets. We're in discussions with other, including Canadian oilsands producers and refiners in California and offshore." |
http://www.canada.com/nationalpost/financialpost/story.html?id=89d764c6-b219-4479-b585-a8b63862aee2
I'm ok with this. There are many markets left for Alberta oil, without having to deal with the thugs in Beijing. |
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bonanzabucks
Joined: 09 Jun 2007
Location: NYC
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| Posted: Fri Jul 13, 2007 7:24 am Post subject: |
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I have friends working in the oil industry in Alberta. What this article doesn't mention (and what my friends tell me) is that China is trying to get oil on the cheap, whereas the US and other markets are more willing to pay market value. The Chinese assume that just because they're growing and they think they'll be the most powerful country that everyone must deal with them and open their arms, regardless of the terms. But it's all about profit and making money and oil companies won't make as much if they deal with China. In fact, I think the jury's still out on all these Western companies' investments in China, if they're profitable or not. I don't think many of them make money from China. Why they continue to pour their money over there is beyond me.
Anyways, the article mentioned one very interesting point:
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| He blamed the Stephen Harper government for not doing more to facilitate Chinese-Canada trade in energy and also said the Liberal government of Paul Martin was more inviting to the Chinese. |
I recall many Liberal and NDP politicians saying that Canada shouldn't deal as much with the US and trade more with China. This includes oil. The Liberals would argue that because of Canada's large Chinese population, China makes a natural trading partner. NDP, on the other hand, wanted to shift trade for political reasons. None of them seemed too concerned for Canadian industry (or human rights). Like I said before, you don't make as much money selling goods to China as you would selling to Europe, other Asian markets or the US. Those statements were irresponsible as the politicians should be concerned about Canadian industry and do their best to encourage the best possible deal for them. Harper seems to be the only one putting Canada first instead of ideology. |
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thepeel
Joined: 08 Aug 2004
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| Posted: Fri Jul 13, 2007 9:54 am Post subject: |
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What China is used to is being bowed to. CNPC enters into a country making grand promises and even more grand demands and due to the numbers involved governments will 'sweeten' the deals. Canada has no need to do so, and is not involved in the economy in the ways that are China's other (poor) oil suppliers. Canada doesn't need to bow and will find markets for her energy exports.
Either way, China is one gigantic bubble right now. I wouldn't want to be betting on that horse until after a strong correction. |
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Leavingkorea
Joined: 27 Apr 2007
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| Posted: Fri Jul 13, 2007 5:49 pm Post subject: |
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Ya, they were talking about that a few days ago here. It will make absolutely no difference at all. There is not enough housing for present worker demands so a few angry Chinamen bailing on F.M. will not matter one bit. The French, Japanese, Koreans...will gladly fill the spot in 5 years when it matters.
BTW there are still Chinese interest in F.M. (CNRL just killed 2 Chinese workers a month or two ago and got recleared to work again this week) just this one new one won't happen. |
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bonanzabucks
Joined: 09 Jun 2007
Location: NYC
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| Posted: Sat Jul 14, 2007 10:14 am Post subject: |
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I really don't think it's worth doing business with China if they continue to have the same attitude. They've become so arrogant now that they're trying to bully everyone else into getting their way. Maybe they can get away with that in Africa (and to a lesser extent, in South America, but it seems to be having the opposite effect now), but countries like Canada, which have control over their economic destiny, won't want to be pushed around. As well, there are more reasonable suitors, like Japan, Korea and other countries that are more than willing to be fair.
BJWD, I 100% agree with you. China is a bubble that I wouldn't want to get into right now. I think the house of cards is already falling. A few years ago, the press was fawning over China's "progress", proclaiming that they will take over the world. Now, China is getting more and more negative press with the poisoned food products, corruption, pollution, shoddy working conditions, etc. The way China has handled it was been so infantile, but seems to be handled in a typical three-step fashion. China at first denies that there's anything wrong and criticizes those who point out the problem. Then when the problem gets out of control, they kill someone off and say it's fixed and there's no need to worry. When the problems still don't go away, they ban imports from other countries to show their "strength". It's not a mature way to handle a problem. They have no shame (and I thought Chinese culture was all about "face" and "honor").
Anyways, after the Olympics is my prediction that things will get messy there. Should be interesting. |
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