A subsidiary of China National Offshore Oil Corp. has struck a deal with a tiny Canadian oil sands company, an announcement that comes roughly a month after the federal government limited China's ability to invest in Alberta's rich bitumen reserves.
China Oilfield Services Ltd. (COSL) and Sunshine Oilsands Ltd. have agreed to trade information about oil sands technology and potentially conduct exploration tests, Sunshine said in a statement Wednesday.
The pair's memorandum of understanding may be precisely the type of partnership Prime Minister Stephen Harper hopes will develop in the oil sands. Sunshine is small company with undeveloped assets. It needs outside partners to provide cash and expertise. While Ottawa is now opposed to state-owned enterprises taking over oil sands companies, it wants joint ventures to flourish.
Sunshine and COSL have agreed to "amicably negotiate and communicate with each other in respect of co-operation in developing multiple thermal fluid oil sands exploration technology in Canada and, if acceptable, sign a co-operation agreement under which COSL will conduct thermal fluid tests within the oilsands areas [belonging to Sunshine]."
The tests will examine whether the "multiple thermal fluid techniques and other relevant technologies" are feasible. The agreement lasts a year, and can be extended. Sunshine did not indicate whether the deal came with a price tag.
COSL's technology may reduce costs as well as the physical footprint of oil sands' facilities, Sunshine said.
The Chinese company, which already does business in Canada, has shares trading in Hong Kong, however CNOOC is its parent company. Part of CNOOC, which is controlled by Beijing, also trades publicly.
Sunshine first listed in Hong Kong in March, 2012, and followed in Toronto in November.
Officials from Sunshine did not return calls for comment.
The Canadian government approved CNOOC Ltd.'s $15.1-billion (U.S.) bid for Nexen Inc. in December. The deal passed Canada's so-called net benefit test, although the Conservative government tightened the rules in reaction to that takeover and another deal between Malaysia's Petronas and Progress Energy Resources Corp.
Natural Resources Minister Joe Oliver has since said it would have been "difficult" for CNOOC to gain approval of its Nexen ambitions under the new net-benefit rules.
While Prime Minister Stephen Harper froze takeovers in the oil sands, save for situations the government deems exceptional, he stressed the government is not opposed to state-controlled companies like CNOOC striking minority partnership agreements.