A joint venture of Chinese petroleum companies has agreed to buy EnCana Corp.'s oil and pipeline assets in Ecuador for $1.42 billion, as China continues to seek energy reserves world-wide.
EnCana, a big Canadian oil-and-natural gas producer, said it agreed to sell the unit to a joint venture called Andes Petroleum Co. A person familiar with the matter said state-owned China National Petroleum Corp. is among the companies in Andes Petroleum. It wasn't clear which other companies might be involved. China National Petroleum couldn't be reached for comment.
By buying EnCana's assets in Ecuador, Andes Petroleum is acquiring daily oil production of 75,000 barrels and proven reserves of 143 million barrels. The price amounts to $9.96 a barrel of oil equivalent of proven reserves.
Andes is also purchasing EnCana's 36 percent interest in a 310-mile Ecuadorean pipeline, which has the capacity to handle 450,000 barrels of oil a day.
India had also been interested in the assets, as it and China seek supplies to feed rapidly expanding economies and satisfy their growing thirst for oil and natural gas. Last month, China National Petroleum agreed to acquire PetroKazakhstan Inc., a Canadian company with energy assets in Kazakhstan, for $4.18 billion, beating out ONGC Videsh Ltd., the overseas-exploration unit of India's state-run Oil & Natural Gas Corp.
In April, Cnooc Ltd., the publicly traded arm of state owned China National Offshore Oil Corp., purchased a 17 percent stake in closely held MEG Energy Corp., a Calgary, Alberta, energy company with a project involving Canada's oil sands, a technically challenging but potentially lucrative oil source. The following month, China Petroleum & Chemical Corp., or Sinopec, agreed to take a minority stake in another oil-sands project in Alberta.
For EnCana, the asset sale is part of a plan to sell more than $10 billion in non-core assets while focusing on its reserves in North America. It entered Ecuador in 1999. EnCana said it plans to use the proceeds to buy back stock and reduce debt.
The sale of the Ecuadorean assets is expected to close before year's end, subject to approval by Ecuador.