PetroChina agrees $ 2.2 bn gas deal

Updated 15 December 2012
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PetroChina agrees $ 2.2 bn gas deal

CALGARY, Alberta: PetroChina will pay Encana Corp. C$ 2.2 billion ($2.2 billion) for a 49.9 percent stake in a rich Alberta shale gas prospect, the first test of new guidelines issued by Ottawa for major energy investments by foreign state-owned enterprises.
Encana said the venture, with a non-controlling interest for PetroChina, allows the partners to bypass stringent reviews under the Canadian government’s new restrictions announced recently.
The government said it was examining the proposed deal to determine if it would face a review under the Investment Canada Act, which governs foreign investment.
It is the second overseas deal announced by PetroChina this week, after the $ 1.63 billion purchase of a minority stake in an Australian liquefied natural gas project, as the state-controlled oil giant seeks to have half its production outside of China within eight years.
“As in all such cases, due diligence is being exercised by reviewing details of the proposed investment to determine if it is reviewable under the act,” Margaux Stastny, spokeswoman for Industry Minister Christian Paradis, said in a statement.
Investments by foreign state-owned companies that do not involve acquisition of control were not reviewable under the act except for their national security implications, she said, but added: “There are circumstances in which control is deemed to be acquired even where a minority ownership interest is involved.”
Canada issued its new framework for approving takeovers of resource assets, particularly oil sands, by foreign state-owned companies, when it approved a $ 15.1 billion takeover by China’s CNOOC Ltd. of oil producer Nexen Inc, and a bid for Progress Energy Resources by Malaysia’s Petronas.
Analaysts were surprised at the timing of the announcement, coming so soon after the politically sensitive Nexen deal, and the release of the new investment guidelines.
“The timing of this deal is really quite unbelievable,” said lawyer Richard Steinberg, head of Fasken Martineau’s mergers & acquisitions practice group.
“This is a step removed from the oil sands and so to the extent that this is not Canadian oil sands, it does seem to be in a less sensitive area and not directly in the bulls-eye,”
said Steinberg, noting that the deal appears to tick all the boxes in the government’s new rule book.
Under the deal, which follows a failed joint-venture attempt by the pair in 2011, a unit of PetroChina known as Phoenix Duvernay Gas will take the nearly-half interest in Encana’s Duvernay play in west-central Alberta, estimated to contain 9 billion barrels of oil equivalent.
It has already paid C$ 1.18 billion and the other C$ 1 billion is payable over the next four years to help pay for development, said Encana, Canada’s largest natural gas producer.
During the period, the partners will spend C$ 4 billion on drilling and processing facilities.
PetroChina was not immediately available for comment. But a source close to the situation told Reuters in Hong Kong that PetroChina expects to receive Canadian regulatory approval for the deal as it is only buying a minority stake.
China’s state-owned energy giants have been bidding aggressively for foreign oil and gas fields as Beijing looks to secure energy supplies to meet rising demand. China also aims to double the share of gas in its overall energy mix to more than 8 percent by 2015, while coal will be cut to just over 60 percent.
PetroChina, the country’s dominant oil and gas producer, said in August that it had earmarked close to $ 16 billion for overseas investment this year and was “actively” looking for acquisition opportunities in Central Asia, East Africa, Australia and Canada.
With the agreement, Encana would be making good on a big part of a high-profile effort to attract partners to help fund development of a host of prospects across North America. It is concentrating on those that feature natural gas that is high in liquid hydrocarbon content.
Such fuels are priced closer to crude oil than to dry gas, of which there is continent-wide glut that has driven down prices at times to decade lows.
“It’s largely an opportunity for us to explore, delineate and ultimately develop what we think is a huge resource that, on our own, we would likely not be able to bring to
commercialization as quickly as we can now with having a partner,” Encana Chief Executive Randy Eresman said in an interview.
“Our understanding is that it does not require any government approvals at all.”
Encana shares rose 41 Canadian cents, or 2 percent, to C$20.85 on the Toronto Stock Exchange. They are up about 12 percent this year.
The government’s new framework effectively bans enterprises controlled by foreign governments from taking control of more businesses in Canada’s oil sands, but the government said it welcomed investment and joint ventures.
“We were waiting to find out if the rules would in any way impact our deal and basically what we think at this point is that the government has made it clear that it supports this kind of transaction — a non-controlling interest in a joint venture,” Eresman said.
Encana and PetroChina in 2011 tried to set up a C$ 5.4 billion joint venture on British Columbia gas assets, but the deal fell through over reported disagreements about asset value and development pace.
“We never ever concluded that transaction, so there were a lot of discussion points that we never ultimately resolved,” Eresman said.
The failed venture would have included Encana’s producing and undeveloped assets, as well as processing equipment, while Thursday’s deal with PetroChina’s new Phoenix unit is essentially the start of a new project, he said.
Encana has spent the past couple of years attracting partners to other parts of its business and has sought more for such assets as the Tuscaloosa Marine Shale in Louisiana and Mississippi and Eaglebine Shale in Texas.
Bond rating agency DBRS said the new venture will strengthen Encana’s cash position to $ 3 billion from $ 2 billion at the end of September, and that it expects proceeds from asset sales will keep funding large portions of the company’s capital spending.
Encana has drilled nine wells on its 180,100 hectares of land in the Duvernay, where numerous companies have amassed large land positions through government land sales and takeovers.
In October, Exxon Mobil Corp. agreed to spend C$ 2.6 billion to take over Celtic Exploration Ltd, which has extensive acreage in the region.
A study by the Alberta Energy Resources Conservation Board and Alberta Geological Survey said the Duvernay formation, which extends through much of central Alberta, contains 443 trillion cubic feet of total gas in place, 11.3 billion barrels of natural gas liquids and 61.7 billion barrels of oil, putting it on par with some of the continent’s largest shale prospects.


Taxi drivers, Uber square up on Istanbul’s roads

Updated 22 April 2018
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Taxi drivers, Uber square up on Istanbul’s roads

  • Uber has enjoyed soaring popularity in Istanbul, where users appreciate the cashless payment system, security and convenience of hailing a cab by phone
  • This has stoked antagonism with official taxi drivers, who have brought legal cases in Istanbul in a bid to have the app blocked in Turkey

ISTANBUL: Istanbul’s bright yellow taxis, ubiquitous and perennially honking for custom, appear ingrained in the daily life of the Turkish metropolis.
But could the fast-growing ride sharing app Uber make them a thing of the past?
Uber has enjoyed soaring popularity in Istanbul, where users appreciate the cashless payment system, security and convenience of hailing a cab by phone.
But, as in several other European cities, this has stoked antagonism with official taxi drivers, who have brought legal cases in Istanbul in a bid to have the app blocked in Turkey.
Tensions have also spilt over into violence, with Uber drivers complaining of being verbally harassed, beaten up or even shot at.
Kemal Kuru, an Uber driver since last year, said he was cornered and beaten by a group as he set off for a concert hall in the Sisli district last month on a job.
“I went to pick up a customer around midnight but someone blocked the road and harassed me verbally,” he told AFP.
“I got out of the car and all of a sudden 10 people attacked me... My teeth were broken and my lip was split.”
Kuru said the assailants could not be immediately identified as they fled into the darkness. But he pointed the finger at taxi drivers.
“I believe our income is getting on their nerves and they think we are stealing their customers.”
In March, shots were fired at an Uber vehicle in Istanbul’s Kucukcekmece district. The driver escaped unhurt.
Uber drivers say they are easily targeted as the vans they generally drive are unusual in the city.
But representatives of official taxi companies condemn such accusations — widely publicized in the Turkish media — as a stunt to discredit their business.
Eyup Aksu, head of the main taxi drivers’ association in Istanbul, accused Uber of launching a “publicity campaign” in an attempt to influence the pending legal cases.
“Taxi drivers have never resorted to violence against Uber. This is a smear campaign to blacken the reputation of taxis,” he told AFP in his Istanbul office.
There are almost 17,400 official yellow taxis in Istanbul, providing an essential and relatively affordable service in a gigantic city where public transport often falls short.
But as new competitors like Uber have emerged, the official taxis have often failed to keep pace with changing times and society.
They have been slow to implement systems to pay by card, install panic buttons that help female passengers in particular feel more secure and are only now considering lights to indicate if the cab is occupied or free.
In a bid to trump Uber, Istanbul taxis are themselves now becoming part of a digital network called iTaksi that allows passengers to order them from their phone.
Aksu admitted some deficiencies in the taxi sector but said taxis were transforming to catch up with Uber’s standards.
“We are shifting to luxurious taxi transport. We now have VIP transport in some touristic places and airports,” he said.
Meanwhile horror taxi stories abound in Istanbul — not just from incredulous tourists but also exasperated locals — about being over-charged, driven a circuitous route to ramp up the meter or being given fake change.
In a well publicized case, an Istanbul court this month handed a taxi driver a suspended jail term for having taken a Saudi passenger on an epic city tour rather than to the airport as requested.
But Istanbul taxi drivers insist they are working hard to make an honest living from a tough business where margins were already tight and now squeezed further by Uber’s presence.
Taxi drivers rent their car from the owner of the license, whose cost of 1.5 million lira (300,000 euros, $370,000) is well beyond most drivers.
The number of license plates available for taxis has stayed stable as the city’s population boomed, driving up their price.
Taxi driver Burhan Yuksek, looking for passengers in the busy waterside Eminonu district, said his business is suffering “hugely” because of Uber.
“I work by a hotel. We used to receive 40-50 calls daily from the hotel and currently it has dropped to 15-20,” he said. “They are pirates. They are stealing our labor and bread.”
Taxi drivers feel they have political backing, with President Recep Tayyip Erdogan regularly pictured drinking tea with the taxi community.
In the bigger of two legal actions brought by taxi drivers’ associations against Uber, an Istanbul court is due to resume hearing the case on June 4.
The tension in Turkey is one of a number of headaches for Uber and its new chief executive Dara Khosrowshahi, who took over last August after founder Travis Kalanick was ousted following a series of scandals.
In London where its drivers number around 40,000, Uber lost its license over its approach to reporting serious criminal offenses and its criminal record checks for drivers.
But it is allowed to operate in the British capital pending an appeal set for later this year.
Uber also put a temporary halt to its self-driving car program in the United States after an accident involving one of its cars near Phoenix killed a pedestrian.
In service for three years in Turkey, Uber has 5,000 vehicles and 8,000 drivers in Istanbul.
Vedat Kaya, of the Tourism and Development Platform, said Uber represented a “revolt against the taxi monopoly,” adding that some 4,500 taxi drivers had already switched to work with Uber.
Former taxi driver Yavuz Sarac, who joined Uber last summer, says he did it after realizing he would not own his own business “no matter if I work for 150 years.”
“Uber has presented new opportunities. I’ve owned my business,” he said, complaining that taxi drivers were exploited by the plate owners, while the Uber license was much less costly.
“I earn a living for my family. To me, it is a kind of escape from slavery to freedom.”