(Adds Trafigura spokesman’s comment on employment, details on Nexen)
By Nia Williams
CALGARY, Alberta, April 17 (Reuters) - Swiss trading firm Trafigura will buy Nexen Energy’s third-party oil lease business in Western Canada, Trafigura said on Friday, but did not disclose the purchase price.
Third-party leasing involves gathering crude from small oil producers in Canada and selling it on the global market.
Calgary-based Nexen, a wholly owned subsidiary of China’s CNOOC Ltd, cut jobs last month in response to plunging global crude prices and said it is closing down its oil trading division.
Asked whether the deal meant the Swiss company would hire Nexen’s crude traders, Trafigura spokesman Benjamin Petrzilka said: “We plan on expanding our team in Canada and are exploring different options.”
Trading houses have benefited from recent volatility in oil prices and are looking to expand at a time when oil producers are cutting costs and scaling back projects.
“Today’s announcement positions Trafigura as one of the largest third-party crude aggregators in Western Canada, and further emphasizes our long-term commitment to growth in the region,” Iain Singer, head of Trafigura Canada, said in a statement.
Trafigura’s Petrzilka declined to comment on how much the company is paying for the Nexen business, or on the size of Trafigura’s business in Western Canada.
He said, however, the deal does not include Nexen’s contract to market bitumen royalty barrels for the Alberta provincial government, which Nexen is giving up as it closes its trading division.
Nexen, acquired by state-owned CNOOC in 2013 for $15.1 billion, was one of the top five physical crude trading shops in Calgary, according to market sources.
Since June 2013 Nexen has managed and marketed roughly half the 70,000 barrels per day of conventional crude that the province of Alberta receives in lieu of cash royalties.
The Alberta government will decide before the end of May which companies will take over contracts to market its crude. (Additional reporting by Dmitry Zhdannikov; Editing by Peter Galloway)