China’s state-run Sinopec agreed to buy ConocoPhillips’s stake in oil-sands producer Syncrude Canada for $4.65 billion.

Sinopec will buy about 9% of unlisted Syncrude, Houston-based ConocoPhillips said today in a statement.

Spending by Chinese companies on mining and energy acquisitions reached a record $32 billion last year.

ConocoPhillips said in October it planned to sell $10 billion of assets over two years to help cut debt.

Sinopec joins domestic rival PetroChina in acquiring stakes in Canadian oil sands players.

“China is moving more and more and more toward wanting to and having a desire to secure natural resources,” Robbert Van Batenburg, head of equity research at Louis Capital Markets said in a Bloomberg report.

“For them to get a greenfield operation in the oil sands in Canada is going to be much more difficult, so this is probably the most viable.”

State-controlled PetroChina won approval from the Canadian government in December to buy a stake in Athabasca Oil Sands’ MacKay and Dover oil-sands projects for C$1.9 billion ($1.9 billion).

China Petrochemical Corporation, Sinopec’s parent, bought Calgary-based Addax Petroleum Corp. for C$8.3 billion last year to add oil reserves.

Sinopec said on 29 March it will pay $2.5 billion to buy a stake in an Angolan field from its parent to boost crude-oil production.

Debt at ConocoPhillips ballooned after boss Jim Mulva agreed to buy Burlington Resources in December 2005, the day before gas prices hit a record at $15.78 per million British thermal units.

The deal closed for a purchase price of $36 billion in 2006.

Mulva said in March that he expects half of the company’s planned $10 billion in asset sales to be done this year.

ConocoPhillips said the sale of the Syncrude stake, which requires Canadian and Chinese government approvals, is expected to close in the third quarter.

Canadian Oil Sands Trust is the lead partner in Fort McMurray, Alberta-based Syncrude with a 36.7%.

Other partners in the venture include Imperial Oil, Suncor Energy, Murphy Oil, Nexen and Nippon Oil’s Mocal Energy.

Source: Upstream

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