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Suncor Energy Inc. . is to take over operations from Syncrude Canada Ltd. , one of the largest oil sands projects in the country, the most recent example of consolidation in Alberta’s pandemic-stricken oil sector.
Syncrude is a joint venture between Suncor Suncor and Imperial Oil Resources Ltd. . Imperial, Sinopec Oil Sands partnership Sinopec and CNOOC Oil Sands Canada CNOOC. Despite the fact that it is owned by oil heavyweights, the mine itself is operated by Syncrude’s separate governance structure.
That will change by the end of 2021, when Suncor takes over operation of the mine, the Calgary-based company announced on Monday evening.
Mark Little, President and Chief Executive of Suncor, told The Globe and Mail on Monday evening that Imperial, Sinopec and CNOOC have given the move in principle, although formal approval is pending.
No cash changes hands as part of the business. Instead, Syncrude becomes just one of Suncor’s many operating assets – similar to the Fort Hills Mine, Oil Sands Base Plant, and the company’s in-situ assets, MacKay River and Firebag.
Mr. . Little said the move will strengthen the company’s operations in the Athabasca area and give Syncrude a competitive advantage. In fact, Suncor recently completed two pipelines between Syncrude and Base Plant.
« The owners have been working for a couple of years figuring out how we can make Syncrude the most competitive company in the world it could be, and the bottom line is that Suncor is running it, » said Mr. . Little said.
Suncor anticipates the change will result in savings of approximately $ 300 million, primarily by consolidating office functions and eliminating duplication in areas such as logistics and infrastructure.
« This involves downsizing. You can see how difficult this is as it results in job losses. “Mr.. . Little said.
The oil sector is facing persistently low prices and compressed demand due to the COVID-19 pandemic. Little said, cost-saving changes add urgency.
« We cannot duplicate the work any further. We have to find better ways to move forward, ”he said.
« We need to be able to figure out how we can make more money from these companies. The collaboration and this step make a lot of sense. ”
The deal signals the first major change in Syncrude’s governance since the operation began 50 years ago. Little said.
Suncor has steadily added portions of the company over the past few years, dating back to 2009 when it merged with Petro-Canada – a deal that gave the company a 12 percent stake in Syncrude.
With this small acquisition, the huge oil sands project was targeted by Suncor for the long term. Little said.
In February 2016, Suncor bought Canadian Oil Sands Ltd. . and the company’s 37 percent stake in Syncrude for $ 6. 6 billion. A few months later, in April, the company paid $ 937 million for American Murphy Oil’s five percent interest in the project.
In February 2018, Suncor bought another five percent and paid $ 920 million for Mocal Energy Ltd.’s stake. .
It now owns just under 59 percent of Syncrude, and Mr.. . Little does not see that change.
Rather, the other partners support the step to « strengthen the long-term interests » of the oil sands project.
« It’s always easy when you own [an asset] in full, but we have no expectation that it will ever happen, » he said.
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If you would like to write a letter to the editor, please forward it to letters @ globeandmail. com. Readers can also interact with The Globe on Facebook and Twitter .
Welcome to The Globe and Mail’s comment community. This is an area where subscribers can connect with each other and with Globe employees.
Syncrude, Suncor Energy, Imperial Oil, Mark S. . Little, Petroleum, Joint Venture, Athabasca Tar sands
World News – CA – Suncor to Acquire Syncrude Operations as Oil Sands Consolidation Continues
Ref: https://www.theglobeandmail.com
