Ecuador court gives green light for Silvercorp, Salazar’s El Domo project
The ruling removes the last major obstacle for the $250 million project, located 150 km northeast of Guayaquil.
The price for bitumen-derived oil improved to less than $30 a barrel below the US benchmark on Tuesday, bringing the value of oil sands producers’ crude to just under $70 a barrel.
The discount of Western Canada Select to US benchmark West Texas Intermediate (WTI) narrowed to $29.08 clawing back much of the ground lost in early November according to CME data.
Last month WCS – a blend of heavy oil sands crude and conventional oil – dropped to multi-year lows with the contract weakening to $41.79 below WTI, the biggest gap in nearly five years.
The relative strength in oil sands crude comes on top off a jump in US oil to 6-week highs of $98.66 on Tuesday after a much larger fall in the country’s oil supply of 7.5 million barrels for the week ended December 6 against expectations of a less than 3 million barrel decline.
WTI’s discount to global benchmark North Sea Brent has been improving steadily at just under $11 a barrel, halving the $23 gap recorded in December 2012.
Brent settled at $109.48 in Europe on Tuesday which translates to an effective price for bitumen-derived oil from Alberta’s oil sands of $69.52 a barrel.
A month ago oils sands producers were getting $50.60 a barrel.
Oil sands companies have also been boosted by by a depreciation in the Canadian dollar, which have fallen to a three-year low against the US currency at 94c. Although it benefits firms paying their workers in loonies, in highly capital intensive industries like oil and gas extraction the cost savings are less pronounced.
The value of Syncrude, a light oil made from mined oil sands after undergoing an expensive upgrading process, has also reversed fortunes closing the gap WTI to a $6.75 discount this week, a two-month high.
