Statoil Sells Stake In Canadian Oil Sands Project To Thailand's PTTEP

Statoil sells stake in Canadian oil sands project

OSLO, November 23, 2010 (AFP) - Norwegian energy giant Statoil said Tuesday it has agreed to sell 40 percent of a Canadian oil sands project to Thailand's PTTEP for 2.28 billion dollars (1.68 billion euros).

The Norwegian company will hold on to the remaining 60 percent of the Kai Kos Dehseh project, expected to move into production in the first quarter of 2011.

Statoil's decision was welcomed by both markets and environmental groups.

At around 1200 GMT, Statoil shares were up 1.12 percent to 125.90 kroner on a market down 1.17 percent.

"The price is fantastic, much more than consensus expectations," a Norway-based analyst told Dow Jones Newswires.

By selling 40 percent of Kai Kos Dehseh to the Thai company, Statoil gets back what it paid to take control of the project in 2007 through the 2.0-billion-dollar acquisition of North American Oil Sands Corporation.

"The agreement to (go) down from a 100 percent position to 60 percent follows other recent transactions designed to optimize the risk and strategic profile of our global portfolio," Statoil chief executive Helge Lund said.

Environmentalists say oil sands extraction produces three to five times more carbon emissions than conventional oil production and requires tailing ponds that leak cyanide, oil, arsenic, copper and iron into local waterways.

Environmental group Greenpeace called Statoil's move a victory.

"We demand that they keep on looking for buyers and that they completely withdraw" from the sector, Greenpeace's Martin Norman said in a statement.

The transaction is subject to Canadian regulatory authorities' approval and is set to be completed in the first quarter of 2011.

-- (c) Copyright AFP 2010-11-23