UPDATED: Norway’s state oil company Statoil is selling off 40 percent of its controversial oil sands project in Alberta, Canada, and likely to book a large gain in the process. The project has sparked much debate in Norway because it’s considered environmentally destructive.
Statoil announced Tuesday that it was selling the 40-percent stake to PTT Exploration and Production of Thailand for USD 2.28 billion. Statoil will retain a 60 percent stake in its investment from 2007 and function as “lead partner and operator.”
Statoil also stated in a report to the Oslo Stock Exchange Tuesday morning that production volumes from the project will continue to be handled and marketed by Statoil Canada Ltd.
Analysts expect Statoil to book a large profit on the sale, perhaps as much as NOK 5 billion, and think it will speed up production in Alberta. Analyst Trond Omdal of Arctic Securities told newspaper Aftenposten that Statoil got “such a good price” for its investment after just three years that it may quiet those who have criticized Statoil for entering into expensive projects like the one also referred to as “tar sands.”
Environmental critics viewed the sale as a victory of sorts, claiming Statoil now realizes the Alberta project is risky. Analysts disagreed, viewing the deal as “strictly business” and in line with strategy to reduce full ownership stakes.
Statoil CEO Helge Lund claimed the sale highlights “the quality of our resources in Canada and shows our ability to create value as an oil sands operator.” The reduction, he said, was in line with Statoil’s risk strategy in its international portfolio.
The oil sands project, which has been described as an assault on the landscape and major producer of carbon emissions, has been harshly criticized by Norwegian environmental groups and others who claim such a project would never be allowed or carried out on Norwegian soil. They’ve claimed Statoil’s involvement hurts Norway’s credibility as an environmentally conscious country and even some of Norway’s government ministers oppose the project. The government, which owns a controlling stake in Statoil, hasn’t attempted to block it, though, allegedly because of a reluctance to interfere in Statoil’s management decisions.
Statoil, keen to invest in oil and gas projects outside of Norway, has claimed all along that it has been careful to meet Canadian regulations tied to its Alberta oil sands project and was using technology meant to boost production and reduce carbon emissions and energy use. The sale of a 40 percent stake in its Kai Kos Dehseh project is subject to approval by Canadian authorities.
The company believes the Canadian oil sands “represent one of the world’s largest oil resources” and will play a steadily bigger role on a global scale.
Statoil’s new Thai partner “fully shares our ambitions for efficient and responsible operation and development of our oil sands licenses in Canada,” Lund said in Statoil’s stock exchange bulletin. PTT Exploration and Production was established in 1985 and is Thailand’s only company active within oil and gas exploration.