Energy

CNPC, Saskatchewan in pact for oil exploration technology

By Wang Ying (China Daily)
Updated: 2011-01-19 15:03

SHANGHAI - China National Petroleum Corp (CNPC) and the Ministry of Energy and Resources in Saskatchewan of Canada will soon sign a memorandum of understanding (MOU) on energy exploration technology, sources said on Tuesday.

A delegation of Canada's Saskatchewan Ministry of Energy and Resources is visiting Shanghai and Beijing this week and is holding talks with potential Chinese investors and companies.

Another significant memorandum of understanding is likely to be signed between Saskatchewan and a Chinese partner after the Chinese New Year which falls on Feb 3, according to Cai Kejue, chief representative of Saskatchewan's trade and investment representative office in Shanghai.

Saskatchewan, with bountiful minerals including oil and gas, and with strategic resources of uranium and potash, is receiving a lot of interests from Chinese companies, said Bill Boyd, Saskatchewan's minister of province's energy and resources.

Saskatchewan boasts 53 percent of the world's potash reserve, and the inland province supplies 20 percent of primary global uranium production, as per 2009 data. Other strategic minerals include base metals, clays, coal, gold, diamond, platinum group metals, rare earth elements and sodium sulfate.

According to Boyd, many smaller companies in the oil, gas and mining sectors are looking for partnerships. "Generally, the large companies finance their operations without much difficulty, but smaller companies are usually looking for partnerships, potential mergers, joint ventures and in some cases buying opportunities as well," he noted.

The latest investment from China is also from Chung Rong, in oil exploration and drilling, according to Cai.

In October 2010, a hostile takeover bid worth of $40 billion from BHP Billion for the world's largest fertilizer supplier, Potash Corp, was rejected by the government of Saskatchewan province, according to Bloomberg news report.

"There are a couple of areas we as a government want to take a closer look before we give approval. That would be for very, very large acquisitions, perhaps in the potash sector or the uranium sector, (which are considered strategic in Saskatchewan)," said Boyd regarding the rejected deal.

However, for Chinese entrepreneurs who want to enter the potash business, there will be no problem for new ventures or even joint ventures, he said.

But for a very significant acquisition in any of the existing potash players, one would have to get approval if it is a multi-million US dollar acquisition, added Boyd.

China's investment in the resources sector has been approved without any difficulties till date, Boyd said.