Canadian Oil Sands spending pegged at $1.3 billion
Canadian Oil Sands spending pegged at $1.3 billion
Canadian Oil Sands, which announced a C$1.3 billion ($1.3 billion) 2013 capital spending budget late Thursday, expects its product to fetch $5 a barrel less on average than the US oil benchmark, West Texas Intermediate, next year.
The differential varies widely. In 2011, synthetic fetched a premium to WTI of $8.27 a barrel on average, and in 2012, it has sold for an average discount of $1.38 a barrel, according to Shorcan Energy Brokers.
Syncrude, a joint venture of international oil companies, produces light crude processed from the oil sands, which has similar characteristics to the oil produced in fast-growing volumes in the Bakken region of North Dakota using horizontal drilling and hydraulic fracturing techniques.
The International Energy Agency recently singled out the Bakken as one of the main drivers of its forecast for the US to overtake Saudi Arabia and Russia as the world’s top oil producer by 2017.
“Refineries are looking to accept this oil. It’s easier to process. I think that’s clear,” CEO Marcel Coutu told analysts. “So I think that we will continue to have a discount for light product, which ours is one of, and we will find refineries that will take our product.”
The crudes compete for pipeline capacity to US Midwest refineries and surging output has spawned a major expansion of rail capacity as new pipelines to move the surging volumes are slow to get built.
In early November, Suncor Energy Inc. said rising light oil production threatened the profitability of a planned 200,000 barrel a day oil sands upgrading facility called Voyageur.
Suncor is also a partner in Syncrude, which has a capacity of 350,000 barrels a day. Last year, the Syncrude partners pushed back some of their large expansion plans, partly to iron out reliability issues that had led to unplanned outages.
Canadian Oil Sands has a 37 percent stake in the project, located north of Fort McMurray, Alberta.
About 63 percent, or C$836 million, of its 2013 budget will be invested in projects to replace or relocate mining infrastructure and to develop facilities to reclaim tailings, a by-product of the mining process. The rest will be spent on regular maintenance, the company said in a statement.
It will spend C$393 million on maintenance, including a planned outage of one of its upgrading units in the second half of 2013.
Canadian Oil Sands said it expects Syncrude to produce 105 million to 115 million barrels in 2013, or about 301,000 barrels a day at the midpoint. That represents an increase of about 3 percent from estimated 2012 volumes.
Costs per barrel are expected to be C$36.67, about 3 percent lower than this year.
The company intends to maintain its quarterly dividend of 35 Canadian cents a share through 2013, the CEO said.
Cash flow, which gives a glimpse into the company’s ability to fund development and pay out dividends, is estimated at C$1.04 billion, or C$2.16 a share, for 2013, the company said.
“Given COS’s strong balance sheet, we believe the company is capable of managing the dividend while funding its major project spending over the next couple of years,” National Bank Financial analyst Kyle Preston said in research note. “Following the completion of these projects, we expect the company will have a much more balanced payout profile going forward.”
Shares of Canadian Oil Sands, which has a market value of C$9.91 billion, were off 13 Canadian cents at C$20.30 on the Toronto Stock Exchange. They have fallen 15 percent so far this year.
Syncrude’s other partners are Imperial Oil Ltd, Nexen Inc, Sinopec, JX Holdings Inc’s Mocal Energy and Murphy Oil Corp.
US unveils new veto threat against WTO rulings
- US tells WTO appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days
- Trump, who has railed against the WTO judges in the past, threatens to levy a 20 percent import tax on European Union cars
GENEVA: The United States ramped up its challenge to the global trading system on Friday, telling the World Trade Organization that appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days.
The statement by US Ambassador Dennis Shea threatened to erode a key element of trade enforcement at the 23-year-old WTO: binding dispute settlement, which is widely seen as a major bulwark against protectionism.
It came as US President Donald Trump, who has railed against the WTO judges in the past, threatened to levy a 20 percent import tax on European Union cars, the latest in an unprecedented campaign of threats and tariffs to punish US trading partners.
Shea told the WTO’s dispute settlement body that rulings by the WTO’s Appellate Body, effectively the supreme court of world trade, were invalid if they took too long. Rulings would no longer be governed by “reverse consensus,” whereby they are blocked only if all WTO members oppose them.
“The consequence of the Appellate Body choosing to breach (WTO dispute) rules and issue a report after the 90-day deadline would be that this report no longer qualifies as an Appellate Body report for purposes of the exceptional negative consensus adoption procedure,” Shea said, according to a copy of his remarks provided to Reuters.
An official who attended the meeting said other WTO members agreed that the Appellate Body should stick to the rules, but none supported Shea’s view that late rulings could be vetoed, and many expressed concern about his remarks.
Rulings are routinely late because, the WTO says, disputes are abundant and complex. Things have slowed further because Trump is blocking new judicial appointments, increasing the remaining judges’ already bulging workload.
At Friday’s meeting the United States maintained its opposition to the appointment of judges, effectively signalling a veto of one judge hoping for reappointment to the seven-seat bench in September.
Without him, the Appellate Body will only have three judges, the minimum required for every dispute, putting the system at severe risk of breakdown if any of the three judges cannot work on a case for legal or other reasons.
“Left unaddressed, these challenges can cripple, paralyze, or even extinguish the system,” chief judge Ujal Singh Bhatia said.
Sixty-six WTO member states are backing a petition that asks the United States to allow appointments to go ahead. On Friday, US ally Japan endorsed the petition for the first time, meaning that all the major users of the dispute system were united in opposition to Trump.