In one of the great contrarian investments of our time, billionaires such as Murray Edwards and Li Ka-Shing are pouring money into Alberta’s oil sands.
While foreign energy companies were selling their oil-sands holdings and investors were purging domestic energy stocks from their portfolios, Mr. Edwards’s Canadian Natural Resources Ltd. (CNRL) and Li family-controlled Husky Energy Inc. have increased their stakes in the region.
As part of a massive shift in ownership that has seen more than $37-billion of oil-sands assets change hands, CNRL dropped $16.5-billion to acquire properties from Devon Energy Corp. and Shell Canada Ltd., while Husky spent US$435-million on a heavy oil refinery last summer. Both companies are expected to keep investing.
Why the show of faith from Mr. Edwards and the Li clan? As Dustin Hoffman’s character was told in the film The Graduate, in one word, plastics.
Research from the International Energy Agency (IEA) and other non-partisan groups shows that “petrochemicals are the fastest growing source of oil consumption, and we believe this is not well known among the investment community,” said energy analyst Phil Skolnick at Canadian investment bank Eight Capital in a recent report.