PetroChina invests $5.4 billion in Encana natural gas venture
Calgary, Alberta, Canada (AHN) – PetroChina International Investments Co. invested $5.4 billion in Encana Corp.’s natural gas venture. The amount involved made it the largest ever Chinese investment in Canada’s energy sector.
The investment is an indicator of the increasing volume of Asian investment in North American energy assets in anticipation of rising demand for fuel by China and South Korea.
However, unlike Australian mining giant BHP Billiton, which attempted but failed to purchase lock-stock-and-barrel the Potash Corp. of Saskatchewan, PetroChina took a more cautious approach and just opted to purchase a substantial stake in Encana. Large buy-ins by foreign companies are subject to Ottawa approval under the Investment Act.
PetroChina has apparently learned the lessons of other Chinese firms that had previously attempted to buy large blocks of North American businesses. China National Offshore Oil Corp. initially entered an $18.5 billion bid for oil firm Unocal in 2005, but eventually withdrew the offer after the transaction created furor in Washington. China MinMetals likewise withdrew its bid for Canadian mining firm Noranda after concerns were aired by the government.
The investment provided PetroChina a 50 percent stake in Encana’s Cutbank Ridge business assets in British Columbia and Alberta. The two firms signed Wednesday a Cooperation Agreement to establish a 50-50 joint venture to develop natural gas production in Cutbank Ridge. The deal ended nine months of discussions between the two energy giants.
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