CHINA/FILE: Chief executive officer of Canada's leading energy transporter Enbridge Inc. expects to deliver at least 260,000 barrels of crude oil to China per day via its major pipeline, to be completed in 2017

Record ID: 344114

  • Title: CHINA/FILE: Chief executive officer of Canada's leading energy transporter Enbridge Inc. expects to deliver at least 260,000 barrels of crude oil to China per day via its major pipeline, to be completed in 2017
  • Date: 11th February 2012
  • Summary: SLATE INFORMATION
  • Embargoed: 26th February 2012 12:00
  • Keywords:
  • Location: China
  • Country: China
  • Topics: Business,Industry,Energy
  • Reuters ID: LVAC3M5KS8WD21RHE2IS2UU3NNKS
  • Story Text: The chief executive officer of Canada's leading energy transporter Enbridge Inc. said on Friday (February 10) that more than 260,000 barrels of Canadian crude oil are expected to cross the Pacific Ocean to China every day when its Northern Gateway pipeline is completed in 2017.
    China is the world's second largest consumer of oil. It currently does not import any Canadian oil, but has indicated it is interested in doing so.
    Energy has been high on the agenda in Canadian Prime Minister Stephen Harper's state visit to China this week.
    In Beijing, Chinese premier Wen Jiabao told Harper that China wants to establish a "long-term, stable and multi-faceted cooperative partnership relationship in the field of energy resources", a Chinese Foreign Ministry statement said.
    Enbridge's 5.5 billion Canadian dollar (5.4 billion U.S. dollar) Northern Gateway pipeline, which runs from energy-rich Alberta to the Pacific Coast, is crucial to Canadian plans to export oil to China.
    It's President and Chief Executive Officer estimates that China will be the top destination for the oil that flows through the pipeline.
    "The volume on start up will be 525,000 barrels a day. And so again, probably at least half, if not more of that are coming into China. We currently expect the pipeline will cost about 5.5 billion (Canadian) dollars (5.4 billion U.S. dollars) to build," Enbridge CEO, Patrick Daniel said.
    China is scouring the world for alternative oil supplies to replace a fall in its imports from Iran.
    Industry sources told Reuters that Beijing had bought the bulk of an increase in crude oil supplies from top oil exporter Saudi Arabia in the last few months.
    It is also importing more cargoes from West Africa, Russia and Australia to replace reduced supplies from Iran.
    But Chinese firms also have a keen eye on Canadian energy and have spent more than 5.5 billion Canadian dollars ($5.4 billion U.S. dollars) on Canadian energy assets in the last seven months alone.
    China's second largest oil producer and top refiner, Sinopec, is among a group of investors that provided early-stage funding for the Northern Gateway pipeline project, Daniel said a year ago in January 2011.
    In exchange, Sinopec will get guaranteed space on the line and the right to take an equity stake.
    A Chinese-Canadian oil trade would benefit both countries, said Daniel, who has been discussing the pipeline project with Chinese businessmen since 2004.
    "I think the main issue in China is to be able to reduce the reliance on Middle East crude oil, and to broaden out supplies. Just the same as in Canada, we're trying to broaden out markets for our crude. Here in China it's broadening out supplies, so you're not totally dependent on one country or one region in the event you don't have access to crude oil. So it's been a concept that's been welcomed with opened arms right from the outset in China," Daniel said on Friday.
    Ottawa intensified its calls to diversify exports after Washington vetoed the Keystone pipeline that would have carried crude from the western province of Alberta to Texas.
    But Daniel said Canadian crude oil currently suffers from heavy discounts -- a trend that can be changed by diversifying its markets.
    "The reason why this project is of so much interest to producers is that they currently sell into one market only, and that's the U.S. market. And in so doing, they don't get full world price for Canadian crude oil," Daniel said.
    The Northern Gateway would run 1,177 km (731 miles) from oil-rich Alberta across the Rocky Mountains to Kitimat on British Columbia's Pacific Coast. At Kitimat, the oil would be loaded on supertankers and shipped to the pacific.
    Enbridge estimates the regulatory process for the pipeline -- which began last month -- will last two years and construction of the pipeline will take another three years.
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