Stoney Nakoda First Nation signs ‘huge’ oil deal with Chinese firm; Chinese corruption probe leaves billion-dollar Alberta project in limbo

Stoney Nakoda First Nation signs ‘huge’ oil deal with Chinese firm by CBC News, July 28, 2014,
Alberta’s Stoney Nakoda First Nation says it has signed a “huge” deal with a Chinese petrochemical company to develop oil and gas on its land. The First Nation is located 60 kilometres west of Calgary and has signed a joint venture agreement with Hong Kong-based Huatong Petrochemical Holdings Ltd. to explore and develop oil and gas deposits on Stoney Nation lands.  About 49,000 hectares of land will be explored and developed through the agreement, with Huatong providing all necessary funding — possibly hundreds of millions of dollars — and Nakoda Oil & Gas Inc. acting as the primary operator for the joint venture. “The magnitude of this new agreement between Huatong and the Stoney Nations will hopefully bring us one step closer to self-sufficiency for our nation and people,” said Bruce Labelle, chief of the Chiniki Nation, which is one of the Stoney Nakoda nations. Large quantities of natural gas have been produced from the Jumping Pound gas field on the Stoney Nakoda Nation since the 1950s. The Stoney Nakoda Nation includes the Bearspaw, Chiniki and Wesley tribes and is a signatory to Treaty 7.

Chinese Corruption Probe Stretches Into Canada, Billion-Dollar Alberta Project Left in Limbo by Chester Dawson with contributions by Elena Cherney and Ben Dummett, July 28, 2014, Wall Street Journal
A Chinese government anticorruption investigation that already has swept aside dozens of officials is now stretching into Canada. A shake-up has hit state-run China National Petroleum Corp.’s Canadian operations and a billion-dollar oil-sands project is now in limbo.

The head of a key China National Petroleum subsidiary was recalled to Beijing last month and has since fallen from public view, according to people familiar with the matter. Also in recent weeks, an email announced the replacement of China National Petroleum’s top representative in Canada. The two are being succeeded by a single executive dispatched from Beijing who will play senior roles at both units, according to emails reviewed by The Wall Street Journal.

Canadian authorities are aware of “these investigations being conducted by Chinese authorities into Chinese officials,” a government official familiar with the matter said. “At this point there is no reason to believe that any Canadians are involved or being investigated,” the official said.

The shuffling provides a glimpse into the unexpected impact that Beijing’s graft probe, which has hit China National Petroleum particularly hard, is having on efforts to exploit the world’s third-largest oil reserve. The two Chinese executives who recently left their posts helped to make billions of dollars worth of investment commitments. Both were board members of trade organizations in energy-rich Alberta and had enough clout to summon meetings with senior Canadian lawmakers at short notice.

One of them, Li Zhiming, led Brion Energy Corp., a subsidiary of China National Petroleum’s listed unit PetroChina Co. The other, Margaret Jia, had worked at China National Petroleum in Canada for nearly a decade and served as its chief representative. An email sent from her account announcing her departure turned up in the in-boxes of the prime minister’s office, other Canadian government officials and business leaders earlier this month.

Neither Mr. Li nor Ms. Jia has been accused of any wrongdoing. Mr. Li was met by corruption investigators upon arrival at Beijing’s airport, according to a person familiar with the matter. He couldn’t be reached for comment. Reached on her Canadian cellphone, Ms. Jia declined to comment. Spokespeople for China National Petroleum in China and Canada were unavailable or didn’t comment on Mr. Li’s and Ms. Jia’s status with the company.

In an email to staff, Brion’s senior management team noted Chinese media reports about Mr. Li and said the reports were a “surprise.” “As we learned from Chinese media, Zhiming is part of an ongoing investigation that was launched when the new Chinese government was in place in late 2012,” said the email, which was sent to employees on July 16, the date Chinese media reported his detention. Being “part of an ‘ongoing investigation’ does not necessarily translate into something more serious,” it said. The email to staff instructs employees not to talk to the press or to the government about the situation.

In recent weeks, China National Petroleum removed Mr. Li from the board of the CNPC-Alberta Petroleum Centre, according to a person familiar with the matter. His photograph is no longer on the website of the group, which is jointly run and funded by CNPC and the government of Alberta to forge links between the Chinese and Albertan oil sectors.

Mr. Li’s removal comes amid what was to be a crowning achievement. In February, he negotiated an agreement that cleared the way for Athabasca to exercise an option in April to sell its 40% stake to Phoenix Energy Holdings Ltd. Phoenix is a holding company for Brion and other CNPC subsidiaries in Canada that Mr. Li headed from 2010 to 2012. More than three months later, money has yet to change hands.

Brion deferred comment to CNPC’s Canadian head office, which didn’t return calls for comment. A spokesman for Athabasca said the company expects the deal to close in the “near term” and declined to comment on the “investigation of those former employees.”

The delay has raised questions about whether the new Chinese management will accept the terms that predecessors agreed to and how sharply China’s interest in Canada’s energy sector may wane. “The question is whether the Chinese will follow through” on the Dover deal, said Wenran Jiang, a special adviser to the Alberta Energy Ministry and director of the Canada-China Energy & Environment Forum.

The corruption crackdown that China’s Communist leadership launched in late 2012 has reached into government bureaucracies and state-run companies. China National Petroleum has been a target, with at least a half-dozen current and former executives detained. Many of those worked for or had ties to now-retired political leader Zhou Yongkang , who once ran China National Petroleum before rising to the inner circle of the Chinese leadership. He hasn’t been accused of wrongdoing and couldn’t be reached for comment. People close to the company and familiar with Ms. Jia’s family say she is the sister-in-law of Mr. Zhou. [Emphasis added]

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