BEIJING, Oct 26: Sinopec Group wants to sell half of its two biggest shale gas fields in Canada to spread costs and accelerate their development as the Chinese energy company focuses increasingly on return of investment, an executive said.

The sale of an overseas asset would be a rare move for one of China’s state-owned energy companies, which have spent hundreds of billions of dollars investing in hydrocarbon resources from North America to Australia to secure China’s energy supply, often to hostile reaction.

Canadian Natural Resources Minister Joe Oliver told Reuters in Ottawa that Sinopec’s stance shows “a state-owned enterprise that is acting like a commercial operation”: buying, selling or bringing in partners when appropriate.

Sinopec would join a number of other companies seeking partners in the shale regions of Western Canada, in what has become a buyer’s market, albeit a popular one because the high-value shale gas is likely to soon find a ready market in Asia.

“We are not only buyers, but also actively seek joint-venture partners to optimise assets,” said Feng Zhiqiang, newly appointed chairman of North America operations at Sinopec International Petroleum Exploration and Production Corp, Sinopec Group’s main acquisition vehicle.

“There is no such thing that a state-owned company’s job is only to obtain resources. Scale is important, profitable scale is more so,” Feng told Reuters in an interview.

Sinopec Group, the parent of top Asian refiner Sinopec Corp, is looking for an equal equity partner for Montney and Duvernay, two Western Canadian shale gas plays totalling some 500,000 acres (2,000 sq. km). They are operated by Daylight Energy, which Sinopec acquired in 2011 for more than $2bn and later expanded.

A sale could be viewed positively in Canada, where a landmark $15.1bn acquisition of domestic company Nexen by state-owned Chinese oil firm CNOOC Ltd generated intense political debate and a policy backlash that centred in part on whether state-owned firms would follow market signals like normal commercial companies.

Oliver, who visited China earlier this month, said he got no sense of a diminished interest in Canada’s resources. “There was a lot interest and enthusiasm for our resources and investing in resource sectors in Canada at the very highest level in the government, right up to and including the president (Xi Jinping),” Oliver said.

“The president commented (that) ...there is a real complementarity between our countries’ strategic interests, particularly in the energy sector. We need to diversify our markets. It’s a strategic imperative. And they want to diversify their sources of supply and want to make investments in that context as well.”

Feng declined to give a price tag for the stakes in the acreage but said their combined recoverable reserves were in the range of tens of trillions cubic feet.

Sinopec, which supplies nearly half of the Chinese oil market, has so far spent $10bn in Canada, around 14 per cent of its total overseas investments.

It pumps an oil equivalent of 3.5 million tonnes a year, or 70,000 barrels per day, from its two main acquisitions there — shale gas-focused Daylight Energy, and a 9.03pc stake in heavy oil producer Syncrude. That is a fraction of the nearly 5m barrels a day Sinopec buys on the international market for Chinese refineries.

Sinopec wants to accelerate expansion over the next few years in Canada, potentially a major and stable supplier to China, which overtook the United States last month as the world’s top net oil importer.

Canada holds the world’s third-largest oil reserves after Saudi Arabia and Venezuela.

Sinopec also hopes to be a sizeable gas player in Canada, building on the Daylight business and targeting annual capacity of 10m tonnes of liquefied natural gas by around 2020 to help feed China’s rapidly growing demand for the cleaner fuel. —Reuters