Under the deal announced by Athabasca Oil Sands Corp. on Monday, PetroChina will acquire a 60 percent stake in its MacKay River and Dover oil sands projects. It is China's largest venture in Canadian oil sands to date.

Both projects are situated on some 5 billion barrels of yet-to-be-developed bitumen, part of Athabasca's nearly 10 billion barrels of bitumen reserves. Calgary-based Athabasca will continue to operate both projects, which will cost between $15 billion and $20 billion to develop.

Commercial oil could flow by 2014, with an initial production of 35,000 barrels per day and subsequent phases reaching a total 150,000 barrels per day.

The PetroChina-Athabasca deal, expected to close Oct. 31, will bolster Alberta's investment arena, hit by about $100 billion in canceled mining and oil sands projects since last year. Canadian oil sands represent the second-largest oil reserves in the world.

"Given the sheer size of the Canadian oil sands, it's an area that cannot be ignored by China," said analyst Lanny Pendill with Edward Jones in St. Louis, the Calgary Herald reports.

But Carolyn Bartholomew, chairwoman of the U.S.-China Economic and Security Review Commission, warns of a growing Chinese presence in America's "back yard," the Globe and Mail reports.

She said that state-owned PetroChina is a proxy of Beijing's Communist government and rejects the notion that it operates as any other commercial oil company.

"I think that an acquisition like this should raise national security questions both for the government of Canada and for the government of the United States," Bartholomew said, calling for a thorough review by Ottawa that would include sensitive national security issues.

However, former U.S. Ambassador to Canada Gordon Giffin said he doesn't expect the Obama administration to oppose PetroChina's investment in the oil sands.

Ottawa has recently added a national security test to its Investment Canada Act, which reviews foreign takeovers above $600 million.

Prime Minister Stephen Harper Tuesday acknowledged that PetroChina's investment in the assets controlled by Athabasca is more controversial than a private sector, foreign investment in Canada would be.

"I will just say that there are laws in place to review foreign investment transactions when they meet a certain threshold and our government has strengthened those reviews by including a clause that allows officials to examine issues of national security," he said, the Globe and Mail reports.

Athabasca Chairman Bill Gallacher said he was confident that Ottawa would give a green light to the acquisition.

"Whatever customary reviews are required, we're going to follow that path and make sure we have all the fulsome disclosure required to make this project move forward," he said.

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