China Broadens Oil Reach in North America

ConocoPhillips agreed to sell its stake in a Canadian oil-sands project to China Petroleum & Chemical Corp. for $4.65 billion, in a major North American expansion by a Chinese oil company.
The deal demonstrates China's increasingly assertive strategy to secure energy resources around the world. The country's rapid growth and emerging middle class enabled it to surpass the U.S. as the world's top automobile market last year, and its state-backed oil companies have been acquiring oil and gas reserves and storage globally.
Just last month, Cnooc Ltd., China's top offshore oil explorer, said it agreed to pay $3.1 billion for a stake in one of the largest Argentine oil-exploration companies. Last year, Cnooc bought stakes in the Gulf of Mexico from Statoil ASA. The Chinese companies' successful investments stand in contrast to Cnooc's 2005 attempt to buy Unocal Corp., which the company abandoned after it sparked resistance in Washington.
Houston-based ConocoPhillips agreed to sell its 9.03% stake in the Syncrude Canada Ltd. oil-sands project. The move by Sinopec, as the international arm of China Petroleum & Chemical is known, further strengthens China's presence in Alberta's oil sands, an area that has enabled Canada to become the largest exporter of crude to the U.S.
In February, PetroChina Co. purchased a stake in an Athabasca Oil Sands Corp. project for $1.89 billion.
Syncrude is the largest Canadian oil-sands project and produced an average of 280,000 barrels a day last year, or about 10% of Canada's oil production. It is a joint venture operated by Canadian Oil Sands Trust, Imperial Oil Ltd., Suncor Energy Inc., ConocoPhillips, Nexen Inc., Murphy Oil Corp. and Nippon Oil Corp.'s Mocal Energy.
The deal increases ConocoPhillips's chances that it will be able to obtain $10 billion from its asset sales, a target the company announced in October as part of a restructuring plan to shore up its finances.
The price almost doubles the best estimates analysts had for ConocoPhillips's Syncrude stake, said Fadel Gheit, an analyst with Oppenheimer & Co. Inc. "This is a very strong start," Mr. Gheit said. "Conoco beat everybody's expectations."