CETA, Energy East and LNG implications with Repsol purchase of Talisman

Brent Patterson
6 years ago

RepsolSpain's Repsol SA has just bought Calgary-based Talisman Energy Inc., the fifth largest oil and gas producer in Canada, for $8.3 billion.

The Globe and Mail reports, "The combined company will produce 680,000 barrels of oil equivalent a day, a 76-per-cent increase to Repsol's current output, and have a presence in more than 50 countries. Its workforce will number 27,000, said Calgary-based Talisman."

The Canadian Press adds, "While [Talisman's] offshore assets in Southeast Asia and its position in several North American shale regions are seen to be attractive to potential bidders, its holdings in the U.K. North Sea have been cited as a hindrance to any potential deals as they've been prone to unplanned outages and have struggled to meet targets." Reuters notes the North Sea holdings have been problematic "because maintenance work on aging platforms has made production targets unreliable and decommissioning obligations have increased."

And the Financial Times highlights, "The takeover marks the end of Repsol’s protracted search for acquisition targets, and its longstanding effort to bolster its upstream operations in politically safe regions such as North America [rather than in countries such as Libya and Venezuela]. After the acquisition of Talisman, North America will account for 50 per cent of the group´s capital employed in exploration."

Energy East exports to Europe
In May 2014, the first shipment of Canadian tar sands bitumen to Europe arrived in Bilbao, Spain. The 600,000 barrels of bitumen had been purchased by Repsol. Warning of increased shipments of bitumen to Europe via the Energy East pipeline, Friends of the Earth Europe has noted, "the Spanish oil company Repsol has existing ties with TransCanada’s key partner Irving oil [in an LNG terminal]." In addition, the current chief executive officer of Talisman, Hal Kvisle, was the CEO of TransCanada Pipelines Limited between 2001 and 2010.

LNG exports from Saint John
In October 2014, New Brunswick premier Brian Gallant told TransCanada that it should consider a second pipeline alongside the Energy East pipeline to carry natural gas to the Canaport LNG terminal in Saint John. The Canaport LNG is a joint partnership between Repsol and Irving Oil. It currently imports liquefied natural gas from countries such as Qatar and Trinidad by tanker, puts the liquefied natural gas through a regasification process, and moves that by pipeline to U.S. and Canadian markets. In November 2013, the provincial Department of Environment gave permission for the terminal to export natural gas using tankers.

Investor-state in CETA
Talisman operates in North America in British Columbia, Alberta, Ontario, Saskatchewan, Quebec, Pennsylvania, New York and Texas. With an investor-state dispute settlement mechanism in the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Transatlantic Trade and Investment Partnership (TTIP), Repsol will be in a powerful position to challenge laws and regulations that protect the environment and Indigenous rights against resource exploitation.

Further reading
Tar sands oil arrives in Spain, more expected with the Energy East pipeline (May 2014 blog)