TORONTO (Reuters) - The chief executive of one of Canada’s largest oil sands companies said on Monday that new government rules limiting control of the Alberta oil sands by state-owned companies will be healthy for the industry.
Marcel Coutu, chief executive of Canadian Oil Sands Ltd, said the changes will allow investor-owned businesses to compete with the deep pockets of state-controlled corporations in the oil sands, the world’s third-largest crude reserve.
Canadian Oil Sands is the largest shareholder in the Syncrude Canada project, one of the biggest operations in the oil sands.
“We now have a level playing field again, which I think will be very healthy for the industry,” Coutu told reporters following a presentation to the Canadian Association of Petroleum Producers annual Investment Symposium.
“I would say now it’s just back to a more business as usual type of approach to investing capital globally.”
Canadian government concern over rising state control of oil sands properties - sparked by a $15.1 billion takeover offer for Nexen Inc by China’s CNOOC Ltd - led Prime Minister Stephen Harper to announce on Friday that state-owned companies will now only be able to gain control of oil sands properties under exceptional circumstances, though minority stakes would still be open to them.
The oil sands, source of much of the oil imported by the United States, need an estimated C$120 billion ($121.6 billion) in investment in the next decade, according to the Alberta government, and the industry must tap foreign sources for much of it.
Coutu said the new rules would not mean that oil sands properties, including the 5 percent stake in Syncrude that Murphy Oil Co may sell, would not find buyers. But acquisitions will now be made for business, rather than strategic, reasons, he said.
“I think there should still be buyers, there just may not be sovereign oil companies in that list of buyers,” he said. “But I think what (the new rules) will do is allow those capital market players that have been in this and many other industries for 100 years to be able to conduct business in (an environment) they have been accustomed to, and that’s primarily a cost of capital that everybody competes in the same market for.”
Coutu also said that Syncrude, which produces up to 350,000 barrels per day of synthetic crude oil from its northern Alberta operations, has been having problems with its crushers and the extraction process, causing what he called “a blip” in production.
He did not say whether Syncrude was close to resolving the problem, but said the project was “working through it now”.
Sources told Reuters last week that Syncrude output would be cut this month by 400,000 barrels because of the production problems.
Canadian Oil Sands shares were down 19 Canadian cents at C$19.81 late on Monday morning on the Toronto Stock Exchange.
Reporting by Susan Taylor Writing by Scott Haggett; Editing by Gerald E. McCormick; and Peter Galloway