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Sinopec, China Construction Announce Preliminary Plans for $8.5 Billion Alberta Refinery Project

On September 13, 2018, two major Chinese firms and Alberta First Nations groups announced preliminary plans to develop and operate a bitumen and petrochemical refinery near Edmonton. Subsidiaries of Sinopec and China Construction, in addition to a group of Alberta First Nations, have adopted the name SinoCan Global for the partnership. Sinopec and China Construction, two of the largest Chinese state owned enterprises, appear to be the primary commercial drivers behind the project.

Edmonton-based Teedrum Inc. and the Alberta First Nations Energy Centre (AFNEC) are slated to lead the development, with Stantec providing the regulatory review and permitting process. The estimated $8.5 billion facility will have a predicted daily refining capacity of 167,000 barrels and produce a “broad range of products for domestic and exporting consumption,” according to a Stantec press release. Teedrum Inc. and the AFNEC were previously at the centre of a failed $6.6 Billion refinery proposal, which died in 2012 after the Government of Alberta withdrew support for the project.

The SinCan Global refinery may demonstrate a renewed confidence in Alberta’s energy sector from foreign investors, which has been the primary target for Chinese investment in Canada since 2005. Chinese investment in the Alberta energy sector accounts for 58% of the total value over this time period, or $48.1 Billion. By partnering with Alberta First Nations groups, Sinopec and China Construction are clearly aiming to remove uncertainty and ensure project stability. The Trans Mountain pipeline delay cemented the need for adequate First Nations consultation throughout any energy project approval process.

Chinese demand for Canadian assets has slowed in recent years, in part due to Chinese capital outflow restrictions implemented in 2016. Verifiable Chinese foreign direct investment (FDI) in Canada dropped to its lowest level since 2009, according to data collected by the China Institute. Recent delays in energy projects have raised concerns about future economic uncertainty and the potential deterrence of foreign investment in Canada. It’s important to note that the SinoCan Global refinery project is at an extremely preliminary stage, as noted in various Canadian media reports. Chinese media has not actively reported on the project, which underlines its preliminary status. Despite this, should it proceed, the SinoCan Global project could indicate a broader trend of renewed Chinese interest in the Alberta energy sector.

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