PetroChina is considering selling natural gas projects in Australia and oil sands in Canada to shift its focus towards more profitable sites in Africa, the Middle East, and central Asia, reported Reuters.
The report says that PetroChina fears that these assets could be subject to sanctions from Western countries in the wake of Russia’s invasion of Ukraine.
Two undisclosed sources told the publication that PetroChina’s assets sale comes soon after an internal review of its global portfolio that started in 2021.
The sale is also driven by the ‘disappointing economics’ of the assets, which incurred huge losses. These assets are in areas that PetroChina considers ‘hard to compete’ in the next two years, the sources said.
The assets considered for sale include Arrow Energy, which was purchased by PetroChina in 2010 via a joint venture with Shell.
Arrow Energy purchased a stake in Browse project, Australia’s largest untapped gas resource, from BHP in 2013.
From 2018 to 2021, Arrow reported losses of approximately A$3.3bn ($2.29bn), including A$2.2bn in impairments, making it the largest loss-making overseas investment for PetroChina.
The Browse project is claimed to be technologically challenging and starting production seems improbable, despite receiving final approval, until 2030.
One of the sources was quoted by the news agency as saying: “Australian gas assets, both Arrow Energy and Browse, are considered among the top ‘negative assets’ in PetroChina’s global portfolio. It’s also an area where CNPC has little competitive edge.”
In Canada, PetroChina intends to sell its wholly-owned MacKay River Oilsands and Dover Oilsands projects, owing to losses pertaining to the production and processing of the tar-like fuel into bitumen.
One of the sources familiar with matter said that PetroChina is ‘displeased’ with the two Canadian projects’ relatively high production costs of $70 per barrel. The two sites also face discontent from residents due to their impact on the environment.