EnCana sells Ecuadorean oil assets to China

Paul Haavardsrud
Calgary Herald, with files from Canadian Press
Wednesday, September 14, 2005

COMMENT:Pressures on EnCana, on the street, in the media, and at the 2004 AGM pushed the company to sell its Ecuadorean operations, particulary the OCP Pipeline.

The strategic problem for NGOs, in what initially was viewed as a victory of sorts, is what happens next. Any purchaser is going to be aware of the controversies, and will be buying in, fully prepared to take the heat. Andes Petroleum Company, a consortium of Chinese companies, is well removed from the shareholder and investor vulnerabilities that a North American or European company is exposed to.

Chinese energy investments continue to expand globally, an echo of US, Dutch and British energy capitalists from a hundred years ago. What forces this unleashes, at the end of the easy oil era, rather than at its beginning, will be profound.

Encana's news release

CALGARY -- EnCana Corp. closed the book on a six-year stay in Ecuador, selling its contentious South American assets to a state-owned Chinese oil venture for $1.42 billion US.

The sale comes only weeks after violent protests against the country's petroleum industry led to speculation that EnCana's year-long search for a buyer would be further drawn out.

As part of a move to focus on the North American natural gas business, EnCana confirmed its assets in Ecuador were on the block last September, while announcing the $2.1 billion US sale of its North sea oil interests to Nexen Inc.

Given the ongoing struggles of doing business in Ecuador, which most recently saw its petroleum industry shut down as demonstrators protested the handling of the country's petro-wealth, the list of potential buyers for EnCana's assets was believed to be limited to national oil companies that are better suited to working around political and social unrest.

EnCana's chief executive Gwyn Morgan has said doing business there was "constantly a roller-coaster."

© The Vancouver Sun 2005