PARIS/CALGARY (Reuters) - French oil and gas company Total said on Monday that it has sold 10 percent of its planned 180,000 barrels-per-day capacity Fort Hills project to Suncor Energy for around $230 million.
Total said it had decided to reduce its exposure to Canadian oil sands projects in the context of lower global oil prices.
Suncor president and chief executive officer Steve Williams said the deal provides a new opportunity and that his company could absorb further investments in 2015 for Fort Hills within its current budget for the year.
“The opportunity to acquire an additional interest at a discounted price underscores Suncor’s confidence in its position within the oil sands,” said Williams in a statement.
“We consider this project to be one of the best opportunities for long-term sustainable growth in the industry today, thanks to the exceptional quality of the resource and our disciplined project execution.”
Oil and gas companies in Alberta, home to vast oil sands deposits and the largest source of U.S. crude oil imports, have laid off thousands of workers in recent months due to slumping global prices.
The bitumen deposits in the oil sands are the world’s third-largest crude reserves, but are more expensive to produce than conventional oil because the production requires vast amounts of energy and water.
Oil sands operating costs have already been squeezed as much as 25 percent at some projects, as global crude prices plummeted from more than $100 a barrel in June 2014 to around $45 a barrel in March.
The industry’s biggest lobby group, the Canadian Association of Petroleum Producers, has also estimated that recent government moves to increase carbon levies and corporate income tax rates would increase costs further by about C$800 million ($604.46 million) over the next two years.
Suncor said the estimated C$15 billion Fort Hills project was on track to produce its first oil in the fourth quarter of 2017.
The sale, which must be approved under Canada’s Competition Act, would give Suncor a 50.8 percent stake in the project. Total would then own a 29.2 percent in the project and a third partner, Teck Resources Ltd would own a 20 percent stake.
Suncor said it anticipated closing the sale by the end of the year.
($1 = 1.3235 Canadian dollars)
Reporting by Bate Felix in Paris and Mike De Souza in Calgary; Editing by Sybille de la Hamaide and W Simon