CALGARY — Thailand has joined the parade of Asian energy firms investing in the oilsands, snapping up a minority stake in Statoil’s largely undeveloped holdings in northern Alberta.
Late Monday, Norway-based Statoil announced it would farm out a 40 per cent stake to PTT Exploration and Production, Thailand’s sole oil and gas company, for US$2.28 billion.
The transaction — Thailand’s first in the oilsands — is a “transformational step” in PTT’s growth plans, the company said in a release Tuesday
“This acquisition provides the company access to a highly attractive oilsands deposit in Canada and a strong platform for future growth into unconventional resources, including the opportunity to form a partnership with Statoil, one of the world’s leading companies on heavy oil and deepwater exploration and production,” PTT said.
The move is the latest in a string of investments by deep-pocketed Asian companies in recent years. In April, China’s Sinopec spent US$4.65 billion for a stake in the Syncrude Canada Ltd. partnership, which owns the world’s largest oilsands mining operation north of Fort McMurray, Alta. Sinopec had already grabbed a foothold in the oilsands through its 50 per cent stake in Total E&P Canada’s Northern Lights project.
China Investment Corp., a state-run sovereign wealth fund, said in May it would kick in $1.25 billion to help Penn West Energy Trust (TSX:PWT.UN) develop some of its oilsands leases.
Another state-owned Chinese energy firm, PetroChina, announced in 2009 it would make a $1.9-billion investment in two projects operated by Athabasca Oil Sands Corp. (TSX:ATH).
Korea National Oil Corp. took on a smattering of undeveloped oilsands leases through its acquisition of Harvest Energy Trust, announced in October of 2009.
And Japan Canada Oil Sands Ltd. has holdings throughout the region.
“Many of these Asian nations are pretty resource constrained, and they’re looking forward,” said John Stephenson, portfolio manager with First Asset Investment Management in Toronto.
“And you kind of look around the world for where prospective basins are — it’s pretty hard to find them.”
The new frontiers for energy exploration include icy waters off the coast of Greenland, ultra-deep waters off the coast of Brazil, and in some politically unstable parts of the world.
“You’re down to kind of a grab bag of areas that are, at best, a little further afield. So Canada, relatively speaking, looks pretty good when you’re comparing yourself to offshore Sudan,” Stephenson said.
Other rapidly growing Asian players that could enter the fray include Malaysia, Vietnam and Indonesia, Stephenson added.
Some have their own domestic energy production, but even that may not be able to keep up with their rising demand down the line.
“All of them are looking for resources because they have fast-growing economies. So I think you’re going to see more of this.”
PTT is 65 per cent owned by conglomerate PTT Public Company Ltd,, which is controlled by the government of Thailand.
PTT has “limited” experience developing resources such as oilsands but shares Statoil’s focus on using technology to reduce costs and environmental impacts, Peter Mellbye, Statoil’s executive vice-president for exploration said on a conference call Tuesday.
“They will not be able to bring in concrete experience related to oilsands. But we think the fact that they share our ambition, that we’re aligned in terms of interests, that they will be a challenging and a constructive partner,” Mellbye said.
Statoil entered the oilsands in 2007, when it acquired North American Oil Sands Corp.
“It has been our intent to farm down since the acquisition in 2007,” said Mellbye.
Statoil decided to pull the trigger now because it has documented how much oil it has on its lands and is just a few months away from starting up a relatively small steam-driven project called Leismer.
Statoil’s investment in the oilsands has drawn controversy in its home country.
Environmentalists and representatives from aboriginal groups in northeastern Alberta travelled to Norway last May to urge Statoil shareholders to pull the company out of the oilsands. They said exploiting the resource emits huge amounts of carbon, harms wildlife and endangers the health of aboriginal communities downstream of the developments.
Shareholders voted 98.6 per cent to reject a motion put forward by Greenpeace and the World Wildlife Fund demanding the company stop developing the project.
In a statement Tuesday, Greenpeace said the PTT transaction shows its campaigning made a difference.
“It’s clear that Europe’s so-called ’greenest’ oil company is realizing just how dirty and risky tar sands development really is,” said Greenpeace climate and energy campaigner Melina Laboucan-Massimo.
“It is increasingly evident that companies are starting to understand the mounting environmental, indigenous and brand risks posed by this devastating resource. The next step is for Statoil to fully sell off its tar sands holding and instead invest in the clean, green, renewable energy the world needs to see.”