With dragon dance parades and street customary, the 150,000-odd members of the Chinese community celebrates New Year in Chinatown of Calgary in mid-February.
However, only a few blocks away, where they are based Big Oil of Canada, the mood remains bleak for officials of the Chinese state oil companies who work tirelessly to improve the profit margins of its mega-investments Alberta.
From 2009 until late 2012, they spent a whopping $ 33 billion in acquiring majority and minority holdings in oil sands in the province, especially in the name of energy security.
Unrestricted access to proven oil resources upstream is precisely what the Chinese state-owned enterprises (SOEs) were seeking since the late 1990s and Canada seemed an ideal destination, since the rules for foreign investment in the nation allowing them easy passage.
But a few years later, the euphoria is fading fast.
There is a growing sense of disappointment in the performance of acquired assets and Canadian sentiment is rapidly gaining ground in China that oil sands projects are too costly to develop, said Wenrang Jiang, a consultant with the Government of Alberta and an official of backroom which acted as a catalyst to bring the blitz of Chinese energy investments.
Jiang gave no estimate of the magnitude of how much China can have overspending by its Canadian assets, but analysts based in Calgary, said the $ 4.65 billion paid in 2010 by Sinopec to acquire a 9% Syncrude Canada was "grossly" overpayment. Analysts have said Sinopec paid as over $ 1 billion more than necessary in the deal.
A comment from analyst said the transaction involved an obvious desire to capture reserves and production tested and reviewed Syncrude had proved reserves of bitumen at $ 23 / b, which was, at that time, substantially higher compared to their peers industry.
There are other important issues also weigh on the minds of Chinese negotiators.
Chinese investment in Canada has increased each time the Prime Minister Stephen Harper has warmed to Beijing, especially after Canadian anger was kindled by the US, Jiang said, noting the investment of $ 15 billion for CNOOC to acquire oil sands producer Nexen Corp came shortly after Washington said that approval of the Keystone XL pipeline can not happen.
Gordon Houlden, director of the China Institute at the University of Alberta in Edmonton, described as investment in energy of a larger one of China in its 5,000 years of history and one that was made with great expectations of finally putting his hands Chinese SOE in the mega resources.
After all, Nexen has not only tar sands and shale gas assets in Western Canada, but in the UK North Sea, West Africa and the Gulf of Mexico.
However, according Nexen has proved a mixed bag. On the one hand, the pipeline west that is expected to bring sands crude to China has not materialized.
Also, when Canada made fundamental changes to the Investment Law of Canada in late 2012, which rejected foreign companies to acquire a majority stake in a company oil sands, legislation was seen as a way to keep the Chinese with the extended arm of the rich resources of Canada.
"China did not like the restrictions. With the display of Canadian tar sands as their sovereign, the Chinese developed a sense of being victimized and unwanted," Jiang said.
The results will probably be too obvious to ignore: Chinese SOE are in a mindset 'failed' which will result in a 'choking' impact on future investments in Alberta, said.
While inevitably curtains can be lowered into the billion dollar deals, Chinese oil companies are making estimates of capital costs to rationalize their investments. They are also working on ways to see where Canada fits into your unit upstream to acquire energy assets that began a decade ago.
'They shall not, without leave, "said Holden, which means Chinese SOE will not sell its Canadian assets.
"They have over $ 4 trillion in foreign exchange reserves and investments have been in treasury bills. But owning energy resources abroad is close to his heart," Holden said. As yields on Treasuries are exceptionally low, it is no surprise that China will work to improve returns on investment of resources.
Of its total consumption of crude oil, China imports about 60% of Middle East, Russia, Latin America, East and former CIS states.
However, there are geopolitical risks associated with these areas and leaving Canada a role, Jiang said.
China is well aware of the advantage, but it's time that their national oil companies to achieve a change in the way international assets operate.
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