CNOOC says Canadian oil glut hits recently acquired Nexen unit

Fri Mar 22, 2013 3:33pm EDT
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* Canadian crude prices suffering amid Alberta glut

* CNOOC finally completed deal for Nexen last month

* CNOOC says integrating Nexen will pose challenges

By David Ljunggren

OTTAWA, March 22 (Reuters) - Chinese state-owned energy company CNOOC Ltd, which last month completed a $15.1 billion takeover of Canada's Nexen, has been hit by a Canadian oil glut that is depressing prices for Canadian crude, a senior executive said on Friday.

Vice President Fang Zhi said CNOOC saw Nexen as an eventual secure supply of energy for China but also wanted to secure the highest price possible for its oil in markets currently accessible.

As output has surged, overtaxed pipeline capacity to U.S. markets from the oil-rich province of Alberta has been a major factor in driving down the price of Canadian heavy crude, cutting into bottom lines of producers.

Western Canada Select heavy oil sold for more than $40 a barrel below the price of U.S. benchmark West Texas Intermediate in January. Prices have improved, but analysts and traders say the fundamentals remain negative.

"As a producer, we would very much like to get rid of the discount in price that we are all suffering," Fang told a conference on China arranged by the Canadian International Council think tank.   Continued...