Foreign Correspondence

[Amaunet]

Following China’s Interest, Snow Visits Oil Sands

Cheney on the way!

Treasury Secretary to tour region today

By DAVE EBNER

Friday, July 8, 2005 Page B5

CALGARY -- There are worries in Washington over China's increasing interest in the Alberta oil sands, the world's second-largest oil deposit, and the United States has dispatched its highest-ranking official yet to visit the region today to assess the massive resource.

Treasury Secretary John Snow will tour the region today, along with David Wilkins, the U.S.'s new ambassador to Canada.

Mr. Snow will hold meetings with oil sands companies, including Suncor Energy Inc., and tonight will be at a private reception in Calgary with three dozen or so business and community leaders.

Greg Melchin, Alberta energy minister, has heard the rumblings of discontent in Washington and said he shares some of the concerns, which mostly have to do with the motives of state-owned enterprises investing in oil supplies.

"I would get concerned if any state-owned company -- it's not just China -- if they want to start pursuing objectives that are not in compliance with normal economic principles but for nationalistic reasons," Mr. Melchin said in an interview yesterday.

Mr. Melchin added that work is under way to bring Dick Cheney, U.S. vice-president, to the oil sands, a trip in which Mr. Cheney has expressed interest.

China made its first three investments in the oil sands this year, including a commitment to a pipeline to carry crude to the West Coast for export. The latest deal came in late May, when China Petroleum & Chemical Corp. (Sinopec) took a 40-per-cent stake in an upstart project controlled by Calgary-based Synenco Energy Inc., with the intention of taking its share of the oil back to China.

As China makes more moves -- another state-owned firm is trying to buy U.S. energy company Unocal Corp. -- the U.S. is showing much more interest in the oil sands, as today's visit demonstrates.

Mr. Melchin said it is not in Alberta's interest to see large amounts of unrefined oil sands output simply shipped to China, because that country wants to scoop up as much crude as it can get. Though it is not a current concern, Mr. Melchin noted that Alberta retains ownership of the oil sands, whereas companies acquire leases to develop their projects. Terms of the leases, Mr. Melchin said, could be amended if deemed necessary.

China's oil sands investments have surprised officials in Washington, said John Richels, president of Devon Energy Corp., a major U.S. energy company that has oil sands operations. Until China arrived, the U.S. figured the oil sands were a resource for North America, he said.

"It certainly has sparked some awareness," said Mr. Richels, answering a question at a conference in Calgary yesterday about chatter in Washington on the issue.

Oil sands production could grow significantly if more capital was invested. Current production is about 1 million barrels a day, about 1 per cent of global output.

Production could, in theory, rise as high as 11 million barrels a day in the 2040s, said analyst Steven Paget of FirstEnergy Capital Corp. in a report yesterday. That's roughly equal to what Saudi Arabia currently produces.

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050708/ROILSANDS08/TPBusiness/Canad....



Canada's oil sands boost U.S. energy security-Snow

World oil prices hit a record of $62.10 on Thursday, though they eased back to just below $60 on Friday. Leaders of the Group of Eight industrialized nations, at a meeting in Scotland, called for more investment in refining and access for foreign investors to oil-rich countries.

However, Snow's visit to the oil sands takes place as the U.S. government reviews an $18.5 billion bid by China's state-owned oil company CNOOC Ltd. for U.S. oil group Unocal . U.S. lawmakers have expressed concern that the deal may pose risks to national security.
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/08/AR2005070801402.html



The United States isn't worried about China's interest in the Alberta oil sands, a top U.S. official said yesterday after he visited the world's second-largest oil deposit.

"I'm not concerned," John Snow, U.S. treasury secretary, said at an afternoon news conference in Calgary in response to a question about the issue. Yesterday morning he was in Fort McMurray and toured the oil sands, meeting with companies working in the region.
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050709/RTICKERSNOW09/TPNational/Can....