Suncor eyes Chinese help for oil sands project-CEO

Wed Jun 27, 2012 9:42am EDT
 
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By Wan Xu and Charlie Zhu

BEIJING (Reuters) - Suncor Energy (SU.TO: Quote) is seeking partnership with Chinese companies to help build its oil sands projects as Canada's top oil producer and refiner struggles with ballooning cost inflation, its top executive said on Wednesday.

"The availability of highly skilled labor is a challenge to oil sands so we are looking at the option to help with that," said Steven Williams, who became president and chief executive officer of Canada's largest oil sands producer earlier this year.

"One of the reasons I am here is to see whether China can compete in the EPC (equipment, procurement and construction) world," he told Reuters in an interview on the sidelines of an energy conference in Beijing, adding he had held preliminary discussions with some Chinese companies in China's capital city on such cooperation.

Williams also said Suncor was capable of meeting its target of growing its oil sands production capacity by about 10 percent per year through 2020, but it must keep costs under control to make economics of the expansion project work.

"We are absolutely confident that we have the resources available and we have the projects to do it. We will only do it if we manage those challenges properly," he said. "So I want the projects to be economic, the construction to be reasonable, the projects to deliver value we anticipate."

Suncor and joint-venture partner Total SA (TOTF.PA: Quote) are planning the largest expansion project yet seen in the oil sands: the construction of two new mines and an upgrader capable of producing 200,000 barrels per day of synthetic crude oil.

The two companies have not released cost estimates for the project, and they do not expect to make a final decision on whether to go ahead until next year.

But already concerns that inflation could squeeze profit margins have been said to be one of the factors behind a 25 percent drop in Suncor's share price over the past year.   Continued...

 
Suncor Energy head office is pictured in Calgary, Alberta June 17, 2009. REUTERS/Todd Korol