A Chinese oil and gas company is seeking a stake in a major Canadian LNG project.
Sinopec, a major player in China’s energy landscape and one of the largest exporters in Asia, is reportedly in talks with Pembina Pipeline Corp regarding a potential deal that could see it gain equity in the Cedar LNG project.
Sinopec was incorporated by the Chinese government in 1998 and is a state-owned enterprise.
The motivations behind Sinopec’s interest appear to be multifaceted. On one hand, the company is facing internal pressures from Beijing to optimize its assets and enhance profitability. This push comes amid broader economic strategies orchestrated by Beijing to bolster China’s position in the global market.
As one source told Reuters, Sinopec’s move to explore opportunities in Cedar LNG aligns with its overarching goal to maximize returns on its gas assets, particularly in light of subdued local Canadian gas prices.
This isn’t Sinopec’s first foray into Canada’s energy sector. Back in 2014, the company acquired projects from Petronas, including valuable British Columbian gas fields.
Initially eyeing exports through the Pacific Northwest LNG project, plans were disrupted when Petronas withdrew from the venture in 2017. Left with assets in Canada’s domestic market, Sinopec’s interest in Cedar LNG could represent a strategic pivot aimed at unlocking new avenues for profitability.
However, amidst these business manoeuvres lie deeper geopolitical currents. Concerns have been raised regarding the extent of the Chinese government’s influence over Sinopec, compounded by the presence of Communist Party members on the company’s board.
Such connections have fueled apprehensions about China’s intentions in Canada’s resource sector, particularly with regard to critical minerals.
The recent comments by Chinese Ambassador to Canada, Cong Peiwu, further underscore these concerns. Asserting China’s commitment to acquiring majority stakes in Canadian mineral companies, Ambassador Cong dismissed allegations of political interference, emphasizing China’s intent to continue business as usual.
“Politicizing normal commercial cooperation and using national security as a pretext for political interference is wrong. China has expressed firm opposition to this. We will continue to do business on the basis of mutual respect and mutual benefit,” said Cong.
Yet, his statements come at a time when geopolitical tensions and security considerations loom large over China’s international investment.
With these minerals playing a pivotal role in various high-tech industries, including electronics and digital technology, their strategic significance cannot be overstated.
Against this backdrop, the Canadian Security Intelligence Service’s warnings about foreign investment in Canadian resources provide a layer of added urgency.
“While the vast majority of the foreign investment in Canada is carried out in an open and transparent manner, a number of state-owned enterprises (SOEs) and private firms with close ties to their government and or intelligence services can pursue corporate acquisition bids in Canada or other economic activities,” claims CSIS.
