ConocoPhillips sells stake in oil sands producer Syncrude to Sinopec for $4.65 billion

ConocoPhillips sells stake in Syncrude

NEW YORK — ConocoPhillips on Monday agreed to sell its stake in Canadian oil sands producer Syncrude to a Chinese petroleum company for $4.65 billion. This marks the largest energy deal in North America by a company backed by China’s government

Oil is a primary target for China, given the country’s huge appetite for energy. The agreement with ConocoPhillips continues a trend of aggressive buying by the Chinese for energy resources, said Fadel Gheit, an analyst with Oppenheimer & Co.

“They’re going for big chunks of assets,” Gheit said.

For ConocoPhillips, the sale is part of its plans to sell about $10 billion in assets by 2011. The company is paring back an expansion undertaken in the middle of last decade.

As China’s economy grows, China has expanded its reach around the globe for raw materials. China already passed the U.S. as the largest market for new cars. Last month, sales of passenger jumped 63 percent in China from a year earlier.

In March, China National Offshore Oil Corp. said it would pay $3.1 billion for a 50 percent stake in an Argentine energy firm. That same month, Arrow Energy Ltd., an owner of gas assets in Australia, agreed to a joint takeover bid from Shell and PetroChina worth $3.15 billion.

In November, Cnooc bought part of Statoil ASA’s interests in the Gulf of Mexico.

“They’re buying with cash, which they have a lot of,” Gheit said.

ConocoPhillips is selling its 9.03 percent stake in Syncrude to subsidiaries of Sinopec International Petroleum Exploration and Production Co. Syncrude is one of the largest crude producers from Canada’s oil sands region.

ConocoPhillips “got a good price,” said Jim Byrne, an analyst with BMO Capital Markets-Canada. “The Chinese have almost an insatiable thirst for oily assets. They’re still resource poor.”

China also doesn’t seem to share others’ environmental concerns about crude from the oil sands, which emits more carbon dioxide than other sources of oil, Byrne said.

Syncrude is a joint venture that includes Canadian Oil Sands Ltd., Imperial Oil Resources, Mocal Energy Ltd., Murphy Oil Co., Nexen Oil Sands Partnership, Suncor Energy, Inc. It is located in Alberta and employs more than 5,000 people.

Last year, Syncrude produced 102.2 million barrels of crude.

ConocoPhillips said the Syncrude deal should close in the third quarter pending approvals by the Chinese and Canadian governments.

ConocoPhillips said last year that it would dramatically reconfigure its operations to focus on more profitable ventures. In addition to the asset sale, the company in March said it would sell half of its 20 percent stake in Russian oil giant Lukoil. That stake is worth about $5 billion.

ConocoPhillips shares added 64 cents to close at $55.96.