With $2.3 Billion Deal, Thailand Joins Asian Rush For Canadian Oil Sands

Thailand last week joined the crush of Asian countries rushing to acquire a stake in Canada's giant oil sands projects when its PTT Exploration & Production Public Co. Ltd. (OTC ADR: PEXNY) agreed to buy 40% of Statoil ASA's (NYSE ADR: STO) Canadian oil sands project for $2.3 billion.

PTTEP, the exploration and production unit of state-owned PTT PCL, is making Thailand's first foray into Canada's oil sands, the largest source of crude oil outside the Middle East.

Norway's Statoil will keep majority ownership and remain the primary operator in the Kai Kos Dehseh project in northern Alberta, which it bought in 2007, according to the deal announced on Tuesday.

Asian companies participating in oil sands projects now prefer to enter partnerships in the projects, leaving complicated field operations to other companies, according to Dr. Kent Moors, a consultant and global energy-sector insider who is also the founder and editor of The Energy Inner Circle, the newest Money Map Press advisory service.

"Several Chinese and other Asian companies have already farmed-in to projects. It is best for them to take a project interest, thereby controlling a percentage of the extraction, but not be the operating company [in the] partnership," Dr. Moors said in an e-mail interview with Money Morning.

Asian state oil firms, led by China, have been scrambling to acquire oil sands projects, spending billions to fuel their booming economies.

The most notable recent Asian entries into Canada's oil sands include:

  • China Petroleum & Chemical Corp. (Sinopec) (NYSE ADR: SNP), China's largest oil refiner and second-biggest oil producer, agreed in April to pay ConocoPhillips (NYSE: COP) $4.65 billion to purchase a 9.03% stake in Syncrude Canada Ltd, the largest oil sands project.!
  • < li>Penn West Energy Trust (NYSE: PWE) in May sold China Investment Corp., the government's giant investment fund, a 45% share of oil sands properties near Peace River, Alberta, for $801 million.
  • In December 2009, the Canadian government gave formal approval for a PetroChina Co. Ltd. (NYSE ADR: PTR) deal to buy a 60% stake in two undeveloped oil sands properties held by Athabasca Oil Sands Corp. that could eventually produce as much as 500,000 barrels per day.
  • Korea National Oil Corp. bought Newmont Mining Corp's (NYSE: NEM) BlackGold oil sands property for $270 million in July 2006.
  • China National Offshore Oil Corp. (CNOOC) (NYSE ADR: CEO), China's giant offshore oil developer, in 2005 paid privately held MEG Energy Ltd $122 million for a 16.7% partnership stake to develop an oil sands project in northern Alberta that could eventually pump up to 210,000 bpd.

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