(Adds details on Syncrude, Suncor bid, quotes)
By Nia Williams
CALGARY, Alberta, Oct 29 (Reuters) - The Syncrude oil sands
project is experiencing "operational challenges" that could be
resolved if Suncor is successful in its hostile takeover bid for
Canadian Oil Sands COS.TO , Suncor Energy SU.TO Chief
Executive Steve Williams said on Thursday.
Suncor, which has a 12 percent stake in the joint venture
Syncrude mining and upgrading project, made a C$4.3 billion
($3.27 billion) offer this month for Canadian Oil Sands
COS.TO , the biggest stakeholder. urn:newsml:reuters.com:*:nL3N1252J2
During a third-quarter earnings call, Williams said Syncrude
has been running at around 60 percent of capacity throughout
October because of problems restarting after the facility cut
production following a fire in late August. urn:newsml:reuters.com:*:nL4N11630J
The project in northern Alberta has the capacity to produce
around 350,000 barrels per day of light synthetic crude oil.
There were issues with the sulphur recovery unit and some
pumps in that system, and repairs were completed over the last
week, Williams said, adding that the plant is now starting to
move back up to more normal rates.
Syncrude is operated by another joint venture partner,
Imperial Oil IMO.TO . Williams said he expected Imperial to
continue to run the project if the Suncor takeover succeeds, but
added that there were opportunities to improve performance.
"If we were to move from 12 percent to 49 percent
(ownership), and we would start to help Imperial with a more
significant resource assistance, we're confident that through
that support to the operator, we can see significant
improvements," Williams said.
Canadian Oil Sands has urged its shareholders to reject
Suncor's offer, describing it as "entirely opportunistic" and
saying it "substantially undervalued" the company. urn:newsml:reuters.com:*:nL3N12J3UZ
Asked if Suncor would walk away from the deal before raising
the price, Williams said Suncor thought it had made a "full and
fair offer" that was compelling to shareholders.
Williams noted crude prices had fallen since Suncor made its
offer, with many commentators forecasting that prices would be
lower for longer, and said the operation of the Syncrude asset
had continued to deteriorate.
There are seven partners in the Syncrude joint venture -
Canadian Oil Sands, Suncor, Imperial, Mocal Energy, Murphy Oil (N:MUR)
MUR.N , CNOOC Ltd's 0883.HK subsidiary Nexen and Sinopec
0386.HK .
Suncor shares were last up 3.3 percent at C$38.77 on the
Toronto Stock Exchange. On Wednesday the company reported a
third-quarter loss of C$376 million on unrealized foreign
exchange losses. urn:newsml:reuters.com:*:nL1N12T014
($1 = 1.3159 Canadian dollars)
(Editing by Bernadette Baum and Paul Simao)