Total E&P Canada has signed an agreement to sell a 10% interest in the C$15bn ($11.3bn) Fort Hills oil sand project in Alberta to Suncor Energy for C$310m ($230m).
Located in Athabasca region some 90km north of Fort McMurray, Fort Hills has a planned capacity of 180,000 barrels per day.
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Suncor’s incremental capital increase to the project is estimated at more than $1bn of which about $700m is remaining project spend.
The company’s partnership share in Fort Hills will increase to 50.8% upon closing.
Total Exploration & Production president Arnaud Breuillac said: "As a result of a full comparative analysis of its global asset portfolio in the context of lower oil prices, Total has decided to reduce its exposure to Canadian oil sands projects.
"Following the suspension of the Joslyn project at the beginning of 2015, the sale of this minority interest will reduce our Capex outlay in the Fort Hills project by over C$700m (about $530m) from now until end-2017, and help us deliver on our global Capex reduction target."
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataAs part of the sale, Total will also transfer a 10% interest in Fort Hills-related logistics, including pipelines, storage terminals and third-party pipeline capacity agreements in Alberta.
Suncor Energy president and chief executive officer Steve Williams said: "This opportunity to acquire an additional interest at a discounted price underscores Suncor’s confidence in its position within the oil sands.
"With engineering over 90% complete and construction surpassing 40%, Fort Hills is on track, with first oil expected in the fourth quarter of 2017."
Subject to regulatory approval, the transaction is expected to close in the fourth quarter.
Upon closing, Total will hold a 29.2% interest in the Fort Hills project, Suncor Energy will be the operator and hold 50.8% and Teck Resources would own 20%.
Image: Suncor oil sands product tanks store refinery-ready feedstock and diesel fuel. Photo: courtesy of Suncor Energy Inc
