(Adds details and context on possible sale; changes slug)
By John Tilak and David French
TORONTO/NEW YORK, April 13 (Reuters) - Chevron Corp (NYSE:CVX) CVX.N , the second-largest U.S.-based oil producer, is exploring the sale of its 20 percent stake in Canada's Athabasca Oil Sands project, which could fetch about $2.5 billion, according to people familiar with the situation.
The company has discussed with investment banks the prospect of selling the stake in the western Canadian oil sands project, a source said.
The possible sale comes after Royal Dutch Shell RDSa.L last month agreed to sell most of its Canadian oil sands assets to Canadian Natural Resources Ltd CNQ.TO for $8.5 billion. does not find the oil sands business appealing in the current environment, as low oil prices make it more challenging for global producers to generate profits, the people said, declining to be named as the matter is confidential.
The California-based company is close to making a decision, taking into account factors such as price, the sources added.
Canadian Natural is seen as a logical buyer as it will be the majority owner and operator of the Athabasca Oil Sands project once the Shell deal closes, the people said.
A Chevron spokesman and a Canadian Natural spokeswoman declined to comment.
The move comes as international players are pulling back from the Canadian energy market, particularly the capital intensive oil sands. A range of factors are contributing to investor apathy towards Canada, including weak oil prices, the higher cost of Canadian operations compared with cheap U.S. shale plays and limited export pipeline capacity out of western Canada.
In March, ConocoPhillips (NYSE:COP) COP.N , the largest independent oil producer, agreed to sell its oil sands and natural gas assets to Calgary-based Cenovus Energy CVE.TO for about C$17.1 billion ($12.9 billion). which posted its first annual loss since 1987 last year, is working on a two-year plan to sell $5 billion to $10 billion in assets in 2016 and 2017. It is expecting to see several growth projects long in the planning, including Australian liquefied natural gas (LNG) projects, to come online this year.
The company is also boosting spending on its low-cost Permian shale operations, all with the goal of making Chevron cash-flow neutral this year. ($1 = 1.3247 Canadian dollars)