The Canadian government is inviting Chinese investment in its oil sands sector, Canada Natural Resources Minister Jim Carr said on Thursday, following a torrid six months in which $22.5 billion in foreign capital fled the embattled sector.
The vast oil sands deposits in northern Alberta are home to the world's third-largest crude reserves but also carry some of the world's highest production costs. With oil prices around $50 a barrel, it makes no economic sense to build new projects.
International oil companies including Royal Dutch Shell and ConocoPhillips have sold off billions in assets to Canadian producers since the start of 2017, stoking concerns about the future of the resource.
Speaking on the fourth day of a five-day trip to China, Carr said the government's 'minds are open' with regard to Chinese investment.
'We think there are opportunities and we laid out, along with experts from industry, what we believe to be opportunities for them,' Carr told reporters on a conference call.
'We would welcome investment from any nation that's interested in the oil sands. The trend of capital flows over the last little while has been international investors have been looking at their opportunities and decided to spread their resources, whereas Canadian investors have stepped up.'
The previous Canadian government under Conservative Stephen Harper had a policy of limiting control of the oil sands by state-owned companies, such as China's CNOOC Ltd . They are still able to hold minority stakes in projects.
Carr did not give details on what sort of investment Canada would welcome from China, but said his government is interested in looking at cases individually.
Between 2005 and 2012 Chinese companies like PetroChina, CNOOC and Sinopec piled into the booming oil sands sector to secure China's energy needs.
But some of those investments, like CNOOC's purchase of Nexen Energy, have been dogged with operational issues, raising questions over whether the Chinese would be reluctant to buy more oil sands stakes.
'It's probably a question not of investing, but whether or not they sell,' said GMP FirstEnergy analyst Michael Dunn. 'Non-Canadian entities have been selling the oil sands, why would the Chinese be different?'
Last July Nexen indefinitely suspended plans to repair its Long Lake upgrader in northern Alberta after a deadly blast at the facility months earlier, leaving the fate of the facility in limbo.