Politics
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Harper approves Nexen sale to China's CNOOC
- Updated
9:21 am, December 8th, 2012 - 1:48 pm, December 7th, 2012
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Credits: REUTERS/TODD KORO
OTTAWA -- Prime Minister Stephen Harper gave China's authoritarian rulers an early Christmas present Friday, giving them a bigger piece of Alberta's oil patch.
As a result, a company controlled by the communist government of China will be allowed to acquire Calgary oil and gas producer Nexen for $15 billion.
But in the same breath, Harper said that state-owned enterprises, from China or anywhere else, would no longer be able to buy up a Canadian company active in the oilsands.
"When we say that Canada is open for business we do not mean that Canada is for sale to foreign governments," Harper said.
"The government of Canada has determined that foreign state-control of oilsands development has reached the point at which further such foreign state control would not be of net benefit to Canada."
From now on, foreign state-owned enterprises will be allowed to acquire control of a Canadian oilsands business "only in an exceptional circumstance," Harper said.
Separately, the government also gave the green light to a bid by a Malaysian state-owned enterprise, Petronas, to buy Calgary-based natural gas producer Progress Energy Resources for about $5.3 billion.
"The decision to approve the acquisitions ... sends a positive signal to investors in Canada and around the world," said John Manley, a former industry minister and now the CEO of the Canadian Council of CEOs. "Canada welcomes foreign investment because it is good for our economy, good for job creation and increases competition, which in turn strengthens productivity."
But federal New Democrats said they were "profoundly disappointed" with the CNOOC deal.
-This is a farce," said Peter Julian, NDP natural resources critic. "Canadians should be very apprehensive about the long-term economic and environmental consequences. In the past, these kinds of takeovers have resulted in job losses."
Harper's cabinet was deeply split at times over the last few months over the deals, particularly the bid by the Chinese for a greater chunk of Alberta's oil patch.
But Harper tried to tried to balance the need Canada has for foreign investment against concerns that foreign governments would get too much control of any one industrial sector by announcing new rules which will guide the government when it assesses investment bids by state-owned enterprises.
"Canadians have not spent years reducing the ownership of sectors of the economy by our own governments only to see them bought and controlled by foreign governments instead," Harper said. "It is not an outcome that Canadians would ever support. It is not an outcome any responsible government of Canada could ever allow to happen. We certainly will not."
For the first time, Ottawa will have a separate rule for the country's oilsands and another rule for businesses in other sectors.
"Purchases of Canadian assets by foreign governments through state-owned enterprises are not the same as other transactions," Harper said.
Nexen began life in 1969 as Canadian Occidental Petroleum and was, at its inception, controlled by an American firm.
It became Nexen in 2001.
CNOOC is believed to have agreed to make annual investments in the Canadian operations of Nexen and is believed to have agreed to maintain Canadian employment levels and have a certain number of Canadian managers.
Those details, though, were not disclosed by the government.
Petronas is believed to have made similar commitments but has also promised to build a new liquid natural gas terminal in northern B.C., a new piece of Canada's energy infrastructure that could cost more than $7 billion.
Petronas plans to take the natural gas Progress produces and ship it to markets in Southeast Asia.
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