SinoCanada Petroleum Corp., a subsidiary of China Petroleum and Chemical Corporation (Sinopec), China's largest oil refiner, signed a contract with Canadian Synenco Energy Inc. Tuesday to form a joint venture.
The new company will exploit the oil sand project in Alberta of Canada, said sources with the Sinopec Wednesday.
According to the agreement, SinoCanada Petroleum Corp. will invest 150 million Canadian dollars to obtain a 40 percent share of the joint venture. While Synenco, as the operator of the project, will hold 60 percent share with the project as the capital.
Located in the northeast of Alberta, the oil sand project includes mining, extracting and pitch modification. With a total investment of 4.5 billion Canadian dollars, the project is expected to produce 5 million tons of synthetic crude oil with the daily output reaching 100 thousand barrels.
As a company established especially for the exploitation of the oil sand field, Synenco began to appraise the project in 1999. Preparations for exploitation began in 2003.
The investment of Sinopec will promote the development of the project and Synenco expects to establish a long-term corporation with Sinopec, said sources with the Synenco.
Oil sand resources have been detected in more than 20 provinces of China but have never been exploited because of the high cost and complicated techniques.
With the rapid development of China's economy and China's soaring demand for oil, the government has paid much more attention to oil sand resources. In the oil and gas resources investigation launched by the government last May, oil sand resources were taken into account of the country's energy resources appraisal system for the first time.
China National Offshore Oil Company (CNOOC), the country's largest producer of offshore crude oil and natural gas, launched its oil sand business last month by purchasing 16.69 percent of equity of Canadian MEG company for 150 million Canadian dollars.