Total and its partners are selling their interests in the Joslyn oil sands project in Alberta for C$225 million (US$171 million).
The Paris-based company announced in a press release on August 31 that the project was being acquired by Canadian Natural Resources Ltd (CNRL). Joslyn is located just south of CNRL’s Horizon project.
The move comes after several international majors exited Canada’s oil sands last year owing to factors such as unfavourable project economics. Oil sands operations are now overwhelmingly concentrated in the hands of CNRL, Suncor Energy, Cenovus Energy and Imperial Oil.
“Reducing our exposure to Canada’s oil sands by selling this asset is in line with our global strategy to focus our oil investments on low breakeven resources and develop a resilient portfolio in the mid and long term,” said Total’s chairman and CEO, Patrick Pouyanne.
Total’s partners in the Joslyn project are Suncor Energy with a 36.75% stake, Joslyn Partnership with 15% and Inpex Canada with 10%.
CNRL said the project “adds significant value to the company’s already extensive portfolio of high-quality long-life low-decline assets, and will allow for more effective lease-line development opportunities between the Horizon and Joslyn projects”.
Since oil prices collapsed in 2014, Total has been expressing scepticism over the long-term potential of oil sands projects amid growing global climate change concerns. Further development of the Joslyn project was suspended in the wake of the oil price crash, and activities since have been limited to fulfilling regulatory requirements and ensuring safety at the site.
The project had a planned capacity of 160,000 bpd.
Total has also been reducing its stake in the Fort Hills oil sands project, selling around 13% of its interest to partner Suncor Energy since 2015.
Subject to authorisation by the Canadian Competition Bureau, the Joslyn agreement is expected to close on September 28. CNRL will pay C$100 million (US$76 million) in cash upon closing the deal and will make additional payments of C$25 million (US$19 million) per year over the next five years.