Sunshine Oil Sands and the New SOE Guidelines
Sunshine Oil Sands of Calgary has announced that it has entered into a "co-operation deal" with a subsidiary of state-owned China National Offshore Oil Corp. The two companies have agreed that they will "amicably negotiate and communicate with each other in respect of cooperation in developing multiple thermal fluid oilsands exploration technology in Canada and, if acceptable, sign a cooperation agreement under which COSL will conduct thermal fluid tests within the oilsands areas of the Company in order to confirm the feasibility of multiple thermal fluid techniques and other relevant technologies with respect to oilsands exploration."
A potential consequence of these revisions will be an increased appetite for joint ventures between Canadian and foreign entities, including SOEs. A joint venture structure may allow SOEs to invest in Canadian industry without engaging the new SOE Guidelines, which is of particular interest in the context of the amendments targeting foreign acquisitions in the Canadian oil sands. Joint ventures enable foreign enterprises to benefit from the experience of long-time oilpatch operators and open the door to a more diverse set of partners.
Sunshine Oil Sands has been very successful at assembling oil sands leases and has significant leases and reserves in the Athabasca oil sands region, but it has not yet produced any bitumen. It is not known whether, in the absence of the new SOE guidelines, CNOOC would have sought to purchase Sunshine rather than entering into this sort of arrangement. Nevertheless, this would seem to be the very sort of joint venture transaction that both the Prime Minister and the Natural Resources Minister intended would be the basis for future foreign SOE investment in the oil sands.