February 14, 2010 / 3:41 PM / in 7 years

BP in talks over $1.2 billion Canadian oil sands deal: report

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<p>A British Petroleum petrol station logo is seen at Heathrow in London February 2, 2010.Toby Melville</p>

LONDON (Reuters) - British oil major BP Plc is in talks to pay about $1.2 billion for a majority stake in a privately held Canadian company with large reserves of oil-rich sand deposits, the Sunday Times reported.

A deal to take a stake in Value Creation Inc could anger environmentalists and some BP shareholders who fiercely oppose the oil sands business, which they say is expensive and environmentally damaging, the paper said.

Value Creation is in financial trouble and faces being put into receivership on Monday, it reported.

BP declined to comment.

Reliance Industries Ltd, which operates the world's biggest oil refining complex in India, is thought to have made a rival $2 billion takeover bid but BP is understood to be the preferred partner, the paper said.

Value Creation Inc's largest block of leases, Terre de Grace, covers about 290 square miles in the Athabasca region of Alberta.

Reporting by Julie Crust; editing by Mike Nesbit

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