Canada's largest integrated energy company and a global leader in oil sands mining, Suncor Energy Inc, has entered into a major strategic alliance with Total E&P Canada Ltd, a subsidiary of French oil and gas giant Total SA to jointly develop oil sands projects in Canada.
The joint ventures include Fort Hills and Joslyn oil sands mining projects, and restarting the construction of Suncor's Voyageur bitumen upgrader near Fort McMurray in Alberta. Suncor will receive a total cash payment of C$1.75 billion for the deals.
Under the terms of the agreements, Total will acquire a 49-per cent interest in Suncor's planned third upgrader, which has a projected capacity of 200,000 bpd.
Besides, Total will increase its stake in the Fort Hills oil sands project to 39.2 per cent from the current 20 per cent by acquiring additional stake from Suncor. Further to the transaction, Suncor will hold 40.8 per cent in the project with the remaining 20 per cent held by Teck Resources Ltd.
In return, Suncor agreed to buy a 36.75-per cent interest from Total's 75-per cent stake in Joslyn joint venture. On completion of the deal, Total will have 38.25-per cent stake, with Occidental Petroleum holding 15 per cent and the balance 10 per cent held by Inpex Canada Ltd.
Suncor president and chief executive officer Rick George said: "The agreement with Total is an important element of Suncor's plans to more than double our oil sands production."
"The deal brings a strong partner to the table, helping us to accelerate development of our growth portfolio and share in the capital investment in a third up-grader and development of new mining projects," George added.
Both the Fort Hills mine and the Voyageur up-grader are scheduled to go on stream in 2016, while the Joslyn project is expected to become operational by 2017-2018, depending on obtaining the necessary permits.
The transaction is expected to close in the first quarter of 2011, subject to certain regulatory and other approvals including Suncor's board and other joint venture partners, Suncor said.
Calgary-based Suncor is the fifth-largest integrated energy company in North America, combining a leading position in Canada's oil sands with complementary operations in refining and marketing, natural gas production, overseas and offshore operations.
The energy major is also a prominent player in Canada's emerging renewable energy industry with wind power and bio-fuels production. The company's shares are listed on the Toronto and New York stock exchanges.
Suncor simultaneously unveiled its ambitious 10-year growth strategy to achieve a production target of one million barrels of oil equivalent (boe) per day by 2020. Over the next decade, Suncor is aiming an annual growth of 10 per cent in oil sands production, and approximately 8-per cent growth in overall production.
Apart from the joint ventures with Total, the company plans continued development of stages 3 to 6 of its Firebag project, stage 2 of the MacKay River project and other investments in ongoing production operations.
In line with the company's long-term growth strategy, Suncor's board has approved a C$6.7 billion in capital expenditure for 2011, with about C$2.8 billion is earmarked primarily for developing its oil sands operations.
In a separate statement, Total Exploration & Production president Yves-Louis Darricarrere said that Total is delighted with ''these groundbreaking agreements with Canada's Suncor''.
The French giant further stated that as a result of the current deals, it would no longer proceed with the planned construction of an upgrader in Edmonton that was recently approved by Alberta's Energy Resources Conservation Board.
Total's other operations in Canada include a 50:50 joint venture with ConocoPhillips in the Surmont oil sands project, and also a 50-per cent interest in the Northern Lights project with the other partner being China's Sinopec Corp.