CALGARY, Alberta (Reuters) - French oil company Total, which is trimming exposure to Canada’s oil sands amid a slump in crude prices, said on Monday it had sold a tenth of the Fort Hills oil sands project in northern Alberta to Canada’s Suncor Energy.
The stake in the planned 180,000 barrel-per-day project was sold to Suncor for around C$310 million (US$233.96 million).
The sale, which is subject to regulatory approval and expected to close by the end of the year, will give Suncor a 50.8 percent stake in Fort Hills. Total will own a 29.2 percent in the project and a third partner, Teck Resources Ltd, owns 20 percent.
Suncor expects to spend an additional C$1 billion on Fort Hills as a result of the deal, including C$700 million in remaining project outlays.
The total C$15 billion cost of Fort Hills is estimated at a capital intensity of approximately $84,000 per flowing barrel of bitumen, according to Suncor. The project will start producing oil in the fourth quarter of 2017.
“We are acquiring an additional 10 percent of a C$15 billion project for C$1 billion,” said Suncor spokeswoman Sneh Seetal.
Canada’s oil sands are home to the world’s third-largest crude reserves but carry some of the highest breakeven costs globally because of the scale of projects and energy-intensive production methods.
As global crude prices plummeted to around $46 a barrel from more than $100 a barrel in June 2014, operating costs have been squeezed up to 25 percent and producers have laid off thousands of workers.
A number of future projects scheduled to start up after 2018 have been deferred, but Fort Hills and other facilities under construction are expected to be completed because of capital already invested in them.
Suncor Chief Executive Steve Williams said the company could absorb further investments for Fort Hills this year within its current 2015 capital budget.
“The opportunity to acquire an additional interest at a discounted price underscores Suncor’s confidence in its position within the oil sands,” Williams said in a statement.
Total also has a 50 percent stake in the Surmont oil sands projects, a joint venture operated by ConocoPhillips.
Spokesman Damien Steffan declined to comment on whether Total was looking to sell more oil sands interests but said Phase 2 of the Surmont project began two weeks ago and the company was “quite happy” with it.
A Teck Resources spokesman said the company would keep its stake in Fort Hills at 20 percent.
“Fort Hills is a low-cost 50-year project expected to operate long after project capital is repaid,” Teck spokesman Chris Stannell said.
Additional reporting by Bate Felix in Paris; Editing by W Simon and Bernadette Baum