16 April 2010 16:43 [Source: ICIS news]
By Stefan Baumgarten
TORONTO (ICIS news)--Sinopec’s $4.6bn (€3.4bn) deal this week to buy a stake in Canadian oil sands firm Syncrude has triggered concerns about the influence the Chinese state-owned energy and petrochemicals major may gain over Canadian oil resources, including chemical feedstocks, an executive of a trade group said on Friday.
Sinopec, Canadian politicians and commentators said, could gain a veto over where the upgrading of oil sands and bitumen takes place – a particular concern of ?xml:namespace>
At the same time, Canadian energy firm Enbridge has put forward plans for a pipeline from the oil sands industry in
Canadian chemical producers have repeatedly underlined the importance of the oil sands industry for chemicals, and the trade group Chemistry Industry Association of Canada (CIAC) was quick to note the Sinopec deal and the debate it triggered on its website.
David Podruzny, CIAC vice president of business and economics, told ICIS that
“We have a concern, to the extent that the economics in
Reduced upgrading in
However, decisions on where the upgrading of Canadian oils sands takes place – in Canada, the US or even in China – were determined by energy economics, and not by the chemical industry, he said.
At this time - with only a narrow price range between processed synthetic crude oil and bitumen – energy economics favoured upgrading in the US, while upgraders in Alberta were not being built or postponed.
“Putting a coker on a [
While the economics for upgrading oil sands in
“Government could do certain things to encourage where upgrading takes place,” Podruzny said.
As an example, he pointed to US tax rules on accelerated capital cost allowances for investments to modify a refinery to handle heavy oil.
“That encourages American refineries to add a coker to their facilities”, inducing them to import oil sands and bitumen from
This applied not just to decisions on where oil sands upgrading takes place, but also, for example, to natural gas and the extraction of natural gas liquids (NGLs) - the key feedstock for
If energy economics made it more attractive for energy firms to export Canadian gas without first extracting the NGLs, those were lost as a feedstock opportunity for chemicals production in Canada, he said.
($1 = €0.74)
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