CNOOC blames Canada for its first-ever half-year loss
Hong-Kong based CNOOC Ltd. (China National Offshore Oil Corp) reported a US$1.2 billion loss for the first 6 months of the year, the first loss since the company became public in 2000. Much of those losses were blamed on a US$1.6 billion impairment charge for idling the Long Lake upgrader.
The company's total oil output fell to 241.5 million barrels of oil equivalent (boe), down 5% from the first half of 2015. This is the company's first decline in output since 1999, blamed in part on poor performance of its oil sands operations. CNOOC has also capped capital spending to US$9 billion for the full year 2016.
Ottawa approved CNOOC's takeover of Nexen Energy in 2012 contingent on retaining its Canadian headcount, maintaining its listing on the TSX, boosting capital investment in Canada and retaining all of Nexen's executive staff.
However, the company began laying off workers (including executives) almost immediately after the takeover was approved. CNOOC has since laid off at least 1,000 workers in Alberta and has also been accused of replacing Canadian workers with Chinese nationals. It is unclear what recourse the federal government now has, if any.
The Harper government quickly soured to the idea of foreign nationals taking over Canadian oil sands assets and promised much stricter rules for future acquisitions in the resource sector.
Nexen's Long Lake upgrader was idled indefinitely earlier this year after a deadly explosion crippled the plant's hydrocracker unit. CEO Fang Zhi called the decision strictly an economic one and insists the company remains committed to Long Lake and the Alberta oil sands in the long term.
At the same time, Chinese appetite for large Canadian assets has also soured. The country now focuses on small acquisitions of distressed assets that largely go under the radar.
However, Federal Finance Minister Bill Morneau told reporters this week he is considering relaxing foreign investment rules in a bid to spur economic growth. PM Trudeau heads to China in early September for the G20 Summit.
CNOOC is owned by the Chinese government.