Canadian Oil Could be Headed to China

China is expanding its beachhead in Alberta’s oil sands, and for the first time has secured the right to ship Canadian oil into its home market.

Sinopec Group has bought a 40-per-cent stake in Synenco Energy Inc.’s planned bitumen-mining operation for $105-million, committing the Chinese state oil firm to a much larger outlay of nearly $2-billion once construction begins on the Northern Lights project.

It is the second time a Chinese state oil company has invested in the oil sands, with the first purchase coming in April when China National Offshore Oil Corp. (CNOOC) bought a one-sixth share in Calgary-based MEG Energy Corp. for $150-million. However, this latest sortie gives China direct control over its share of the crude produced from Northern Lights, allowing Sinopec to ship oil across the Pacific.

That is a historic breakthrough for the oil sands sector, as a new market opens up, as well as a potential headache for U.S. policy makers who face unfamiliar competition for Canadian crude.
The Globe and Mail