Suncor seeks Chinese help for oilsands project: CEO

Suncor Energy is seeking partnership with Chinese companies to help build its oilsands projects as Canada’s top oil producer and refiner struggles with ballooning cost inflation, its top executive said on Wednesday.

“The availability of highly skilled labour is a challenge to oilsands so we are looking at the option to help with that,” said Steven Williams, who became president and chief executive of Canada’s largest oilsands producer earlier this year.

“One of the reasons I am here is to see whether China can compete in the EPC (equipment, procurement and construction) world,” he said on the sidelines of an energy conference in Beijing, adding he had held preliminary discussions with some Chinese companies in China’s capital city on such co-operation.

Williams also said Suncor was capable of meeting its target of growing its oilsands production capacity by about 10 per cent per year through 2020, but it must keep costs under control to make the economics of the expansion project work.

“We are absolutely confident that we have the resources available and we have the projects to do it. We will only do it if we manage those challenges properly,” he said. “So I want the projects to be economic, the construction to be reasonable, the projects to deliver value we anticipate.”

Suncor and joint-venture partner Total SA are planning the largest expansion project yet seen in the oilsands: the construction of two new mines and an upgrader capable of producing 200,000 barrels per day of synthetic crude oil.

The two companies have not released cost estimates for the project and do not expect to make a final decision on whether to go ahead until next year. But already concerns that inflation could squeeze profit margins have been said to be one of the factors behind a 25 per cent drop in Suncor’s share price over the past year.