Syncrude deal gives China veto on upgrading

The Chinese state oil company's deal to gain a stake in Alberta's Syncrude oilsands operation gives it a veto over whether to process bitumen in the province or export it, the Globe and Mail reported Wednesday.

Houston-based ConocoPhillips said Monday it has agreed to sell its minority nine per cent interest in the Syncrude consortium to subsidiaries of Sinopec International Petroleum Exploration and Production Co. The price is $4.65 billion US.

Allseven members of the consortium have similar vetoes over "business-changing" decisions that involve major investments.

The government of Alberta has been trying to encourage companies to process the bitumen in the province because upgraders bring jobs, tax revenues and potential research into new technologies.

But some Canadian producers already ship bitumen to the U.S. for upgrading.

Calgary-based Enbridge Inc. has made a controversial proposal to build a pipeline to export bitumen through the Rockies to the West Coast, where it could be shipped to Asia or the U.S. coast. That is opposed by aboriginal and environmental groups.

Sinopec is Asia's biggest refiner and has been expanding its capacity to handle heavy oil, which is produced from the oilsands as well as in Russia and Venezuela.

Syncrude is a consortium of seven companies, with the largest stakeheld by Canadian Oil Sands Trust, with 36.7 per cent.