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Sinopec Joins Consortium for Canadian Oil Refinery

Sinopec Joins Consortium for Canadian Oil RefinerySinopec Joins Consortium for Canadian Oil Refinery

China’s Sinopec Corp has joined a group planning to build an oil refinery in Alberta, an enterprise that would strengthen demand for the Canadian province’s heavily discounted crude.

State-owned Sinopec, formally known as China Petroleum and Chemical Corp, an Alberta indigenous group, China State Construction Engineering Corp, and Alberta management company Teedrum plan to build a refinery to process 167,000 barrels per day of crude into gasoline and other products, the project’s consulting firm Stantec Inc said, Reuters reported.

"The SinoCan Global refinery would cost $8.5 billion, with a financing plan still to be worked out," said Teedrum President Ken Horn who is leading the effort. Ownership has not been determined. "The group hopes to receive regulatory approval from the Alberta and Canadian governments within two years," he said in an interview on Friday. Most of the refined products will be exported.

“It helps create value for the bitumen,” Horn said, referring to the tarry, semi-solid form of Alberta’s heavy crude.

“Right now, we ship most of that crude out of the province. We should do a lot more to maximize the value of that asset.”

Most of Canada’s crude is produced in landlocked Alberta, where pipeline capacity has not expanded as rapidly as production. Resulting bottlenecks have hindered transportation to US refineries, steepening an already deep price discount for the province’s crude, which grew to a multi-year high this week.

Sinopec’s interest is encouraging news for a Canadian sector that has seen foreign oil majors retreat over concerns about high production costs and the oil sands’ environmental toll.

China’s involvement would complement its existing Alberta investments, Horn said.  State-owned CNOOC Ltd bought energy producer Nexen in 2013.

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