Page last updated at 10:25 GMT, Wednesday, 30 December 2009

China's PetroChina invests in Canada oil sands

Casino in Fort McMurray, Alberta, Canada
Canada's oil sands mean big investment in the west of the country

Canada's Industry Minister, Tony Clement, has given PetroChina the go-ahead for a $1.7bn (£1bn) acquisition of two oil sand projects.

The deal gives the Chinese company 60% control of Athabasca Oil Sands Corporation's MacKay and Dover oil sands deposits in Alberta province.

The two are projected to yield five million barrels of oil, according to the company.

The sands contain the second-biggest store of oil in the world.

They are estimated to hold 175 billion barrels of oil. Only Saudi Arabia holds more. But it is tricky - and costly - to extract oil from such sands.

Only in the past few years has the price of oil been high enough to make it worthwhile. It is currently just short of $80 a barrel.

Canada's industry minister, Tony Clement, said: "I am satisfied that the investment is likely to be of net benefit to Canada."

He said the Chinese company made a commitment to contribute more than $250m to cover its share of developing the oil sand projects over the next three years, as well as boosting employment and managing a regional office in the area for a period of five years.

The deal was originally agreed two months ago.

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