STATOIL TAKEOVER TARGETSStatoil Seeking Canadian Oil-Sands Project, Partner
Thursday September 28th, 2006 / 20h46
By Norval Scott and Elizabeth Cowley Of DOW JONES NEWSWIRES CALGARY -(Dow Jones)- Norwegian energy firm Statoil ASA (STO) said Thursday it's considering diversifying its operations to include Canada's oil-sands province, making it the latest foreign energy company to cast its eye on the region's burgeoning production potential.
"We are looking at business opportunities in Canada related to oil sands," said Rannveig Stangeland, public affairs manager for Statoil's international exploration and production division.
While Statoil, which currently doesn't have any Canadian operations, is looking at expanding into the country, the process is in very early stages, and there's no time frame for any deal, she said.
"We would be looking to do a project with others, but it's too early to say whether we'd develop an entirely new project or invest in an existing one," she added.
Canadian newspaper The Globe and Mail has reported that Statoil, which is 70.9% owned by the Norwegian state and produces around 1.2 million barrels of oil equivalent a day, is looking to build an integrated oil-sands project in Alberta, with an initial deal possibly costing $1 billion.
Statoil is looking for a project in which steam is injected into a heavy-oil reservoir and the bitumen within is pumped to the surface, rather than a conventional oil-sands mining operation. It also wants to construct an upgrader, which processes Alberta's heavy crude so it can be received by more refineries.
The amount Statoil might spend overall on developing a project hasn't yet been defined, Stangeland said. She added that the company has experience with operating heavy oil projects, particularly through its involvement in the 200,000 barrel-a-day Sincor development in Venezuela.
Logical Choice For Big Firms While crude from Alberta's oil sands is expensive to produce as it's mixed with sand, making extraction difficult, higher crude prices have made the region attractive. Output from the region is expected to rise from 1.1 million b/d in 2005 to 3 million b/d in 2015. If Statoil does complete any deal, it would join firms like France's Total SA (TOT), China Petroleum & Chemical Corp. (SNP) and South Korea's Korea National Oil Corp., all of which have recently moved into the burgeoning region.
Because Alberta is one of the few remaining places in the world with the potential to increase production and has a low risk profile, it's no surprise that Statoil should look there, a Norwegian energy analyst, who spoke on the condition of anonymity, told Dow Jones Newswires.
"Statoil is such a big company now that in order to make a difference in their portfolio, they need large resources, and the oil sands (region) is the largest resource in the Western hemisphere," the analyst said.
"There's plenty of scope for Statoil to develop something there," he added. "But there are also some existing players there already that could be bought if it's difficult to get into an organic development project."
Possible entry ways for Statoil to get into the oil sands could include acquiring firms like OPTI Canada Inc.(OPC.T), Petrobank Energy & Resources Ltd (PBG.T) or Connacher Oil and Gas Ltd. (CLL.T), all of which are currently developing projects there, said Randy Ollenberger, a Calgary-based energy analyst for investment bank BMO Nesbitt Burns. In particular, OPTI Canada - whose C$3.5 billion, 58,500 b/d Long Lake project in development includes the construction of an upgrader - appears to fit what Statoil is seeking, he said.
While some other Canadian oil companies, such as Western Oil Sands Inc. (WTO.T), UTS Energy Corp. (UTS.T) and Synenco Energy Inc. (SYN.T)are also considered to be potential acquisition targets for other firms, because their projects are more mining-focused they don't appear to fit the profile of a Statoil target, Ollenberger added.
-By Norval Scott and Elizabeth Cowley, Dow Jones Newswires; 403-531-2912; norval.scott@dowjones.com