Chinese firm owns controlling share of Northern Cross

A world leader in oil and gas development has significant interests in the Yukon.

A world leader in oil and gas development has significant interests in the Yukon.

Last month, China National Offshore Oil Corporation, China’s largest producer of offshore crude oil and natural gas, made a bid to buy Nexen Inc., a Calgary-based oil and gas company.

It is also a majority owner of Northern Cross, the company with interests in Eagle Plains. CNOOC bought a 60 per cent stake in the private company in June 2011.

Until this week, Northern Cross had only described the size of CNOOC’s investment as “significant.”

CNOOC’s money has bankrolled Northern Cross’s latest exploration efforts in Eagle Plains. There are an estimated six trillion cubic feet of natural gas under Eagle Plains.

This large foreign investment does not change Northern Cross’ direction or plans, said David Thompson, the company’s CEO and director.

Northern Cross has promoted its work as a means of addressing the Yukon’s looming power shortage. CNOOC’s financial backing “just reinforces” this plan, said Thompson.

Large investments from Chinese companies should not necessarily be a cause for concern, said Doug Matthews, an energy analyst and writer from Alberta. In fact, it can actually be a good thing, he said.

Chinese companies can provide money to help companies move forward with other projects. If China’s coming to the territories, it’s “probably a good sign,” he said.

For many years, the biggest customer for Canadian oil was the United States. That isn’t true anymore, said Matthews. The industry needs new customers and markets. The obvious place for that is Asia, particularly China, where there’s less shale gas.

Private companies can also borrow from Chinese companies at lower rates, Thompson said.

Some people may worry that foreign interests will drive companies more than national interests will, he said. But not all companies are interested in natural resources.

Some may just be interested in learning about different technologies, like fracking trucks, he said.

Northern Cross is not the only Yukon mining company with Chinese partners. Chinese companies own Yukon Zinc, which operates the Wolverine mine near Ross River. Selwyn Resources, which owns a big lead-zinc deposit near the Northwest Territories border, also has Chinese partners.

Contact Meagan Gillmore at

mgillmore@yukon-news.com

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