BEIJING: Sinopec Group wants to sell half of its two biggest shale gas acreages in Canada to spread costs and accelerate their development, as the Chinese energy company focuses increasingly on return of investment, an executive said.
A sale of an overseas asset would be a rare move for one of China's state-owned energy companies, which have spent hundreds of billions of dollars investing in hydrocarbon resources from North America to Australia to secure China's energy needs.
"We are not only buyers, but also actively seek joint venture partners to optimise assets," said Feng Zhiqiang, newly appointed chairman of North America operations of Sinopec International Petroleum Exploration and Production Corp, Sinopec Group's main acquisition vehicle.
"There is no such thing that a state-owned company's job is only to obtain resources. Scale is important, profitable scale is more so," said Feng.
Sinopec Group, the parent of top Asian refiner Sinopec Corp, is looking for an equal equity partner for Montney and Duvernay, two shale gas plays totalling about 2,023 sq km in Western Canada. They are part of Daylight Energy that Sinopec acquired in 2011 for more than US$2 billion (RM6.3 billion) and later expanded.
A sale could be viewed positively in Canada, where a landmark US$15.1 billion acquisition of domestic company Nexen by state-owned Chinese oil firm CNOOC Ltd earlier this year generated intense political debate and a policy backlash.
Feng declined to give a price tag for the stakes in the acreages but said their combined recoverable reserves were in the range of tens of trillion cubic feet.
Thanks to successful exploration and a low purchase price, Sinopec has boosted the value of Montney "many times over", but the drilling required to monetise the unconventional resource was too heavy for Sinopec to handle alone, said Feng.
Sinopec wants to remain the operator.
Sinopec, which supplies nearly half of the Chinese oil market, has so far spent US$10 billion in Canada, around 14 per cent of its total overseas investments. Reuters