UPDATE 2-Total to book $1.65 bln Q1 loss on Canada project exit

Thu Mar 28, 2013 7:37am EDT

Related Topics

* Sells 49 pct stake in Voyageur Upgrader to Suncor

* Will book $1.65 bln loss in Q1

* Sees savings of over $5 bln in next 5 years

* Decision for Fort Hills project seen at 2013 end (Adds details, background)

By Elena Berton and Benjamin Mallet

PARIS, March 28 (Reuters) - Total will book a $1.65 billion first-quarter loss on its withdrawal from a long-delayed oil sands project in Canada, it said on Thursday, a day after partner Suncor pulled the plug on the plant citing lower potential returns.

French oil major Total said it has sold its 49 percent stake in the Voyageur Upgrader project in northern Alberta to Canada's largest oil company Suncor Energy, which holds the remaining 51 percent, for $500 million.

Voyageur Upgrader was part of a larger oil sands partnership between Suncor and Total that also includes the Fort Hills and Joslyn oil sands mines in northern Alberta.

Total retains a 38.25 percent stake in Joslyn, currently in the engineering review phase, and a 39.2 percent interest in Fort Hills. The final investment decision for Fort Hills is expected in late 2013, Total said.

Suncor said on Wednesday it was scrapping the partially built Voyageur plant seven years after it was first approved, as competition in the North Dakota Bakken region cut potential returns from the multibillion-dollar venture.

The sale by Total, which will save it more than $5 billion over the next five years, reflects declining prospects for plants that "upgrade" bitumen from oil sands into refinery-ready light crude, due to a surge of cheaper crude in North America.

"Following a thorough review of its assets shared with Suncor Energy in Canada, Total concluded that the investment in the Voyageur project was no longer justified," the company said in a statement.

Total bought its stake in Voyageur Upgrader at the end of 2010, just before Suncor decided to revive it in 2011, after mothballing the plant during the 2008-2009 financial crisis.

Total is due to report is first-quarter earnings on Apr. 26.

Total's shares, which have declined around 5 percent since the start of the year, were trading 0.2 percent lower at 37.36 euros at 1114 GMT on a CAC40 bluechip index up 0.25 percent. (Reporting by Elena Berton and Benjamin Mallet; Editing by Geert de Clercq and Alison Birrane)

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