Date
22 March 2017
Nexen chief executive Fang Zhi said the two accidents revealed deep flaws in the company’s ability to safely run the facility. Photo: Nexen
Nexen chief executive Fang Zhi said the two accidents revealed deep flaws in the company’s ability to safely run the facility. Photo: Nexen

CNOOC’s US$15 bln bet on oil sands backfires

A subsidiary of Chinese state-owned oil giant CNOOC Ltd. has raised the possibility that it may abandon a key part of an oil-sands project in northern Canada, after an investigation into two major accidents uncovered managerial and safety lapses in one of its facilities, the Wall Street Journal reports.

Nexen, which CNOOC acquired in 2013 for about US$15 billion, said it will review the long-term viability of its operations in Alberta after two major accidents in the province, according to the newspaper.

Last summer, a pipeline burst at its Long Lake facility in Alberta, spilling 31,500 barrels of oil.

Then in January, an explosion occurred at the plant’s crude-processing unit, killing two workers.

Nexen chief executive Fang Zhi said Tuesday the two accidents revealed deep flaws in the company’s ability to safely run the facility.

Investigation showed that the six-month old pipeline hadn’t been properly moored and its high-tech leak detection system failed.

On the other hand, repair of the processing unit would cost about US$100 million.

The Nexen deal ranked as China’s biggest-ever overseas takeover, surpassed only recently by China National Chemical Corp.’s pending acquisition of Switzerland’s Syngenta SA, the Journal said.

CNOOC was hoping to use Nexen as a springboard for its expansion in North America following its failure to acquire Unocal in 2005, the report said.

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