Sinopec chases Husky
(Xinhua)
Updated: 2004-12-01 13:58

China Petrochemical Corp. (Sinopec Group), China’s biggest oil refiner, was in talks with Hutchison Whampoa and its controlling shareholder Li Ka-shing to buy all or part of their controlling stake in Canada’s Husky Energy, a Sinopec source said.

An acquisition would not only give Sinopec access to Husky’s millions of barrels of oil and natural gas reserves, but could provide the entry that Sinopec has been seeking into the province of Alberta’s massive Athabasca oil sands.

For Hutchison, the ports-to-telecoms conglomerate, a sale would provide a one-shot capital gain of as much as HK$17.2 billion, earnings that would help offset the continuing losses on the company’s massive bet on 3G telecommunications services.

Hutchison owns 34.7 percent of Husky while Li and his family trust together hold another 36.3 percent.

Speculation that Hutchison might be on the verge of selling its Husky stake helped drive Hutchison shares up 4.55 percent Monday to a two-year high at HK$69.

A representative of Sinopec Group, the parent of Hong Kong-listed China Petroleum & Petrochemical, was currently in Canada meeting Husky officials, the Sinopec source said.

Industry sources said the Sinopec Group had been eyeing an investment in Alberta’s oil sands for some time as it sought to lock in access to oil supplies for the rapidly growing Chinese market.

The country next year is expected to import 40 percent of its crude oil, a percentage that is almost certain to swell in coming years.

In June, Sinopec was considering a proposal to ship synthetic crude derived from the oil sands via a pipeline across the Canadian Rockies to British Columbia, where it would be loaded on to tankers bound for China, according to PetroEnergy Information Network.

Sinopec is not alone in its interest in Canadian oil reserves. Both PetroChina, the country’s biggest integrated oil company, and China National Offshore Oil Corp (CNOOC) have also held talks with Canadian oil producers recently.

PetroChina two years ago held talks about acquiring the combined Li family-Hutchison stake, but the two sides were unable to agree on a price.

According to PetroEnergy, PetroChina has had discussions regarding a long-term agreement to buy syncrude with the Canadian Oil Sands Trust. PetroChina officials could not be reached for comment.

Though the oil sands assets may be the biggest attraction, Husky also has other oil and gas production in Canada and Indonesia, along with refineries and petrol stations in Canada.

Husky currently produces 310,000 barrels of oil a day. That will rise to 500,000 barrels per day in the next year.

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