Oilsands investment from China shrinks after Nexen deal

CBC News Posted: May 02, 2014

Experts on trade issues say the amount of money China is investing in the Alberta oilsands has slowed considerably since the takeover of Nexen.

Ottawa approved the $15 billion takeover of the Canadian company by state-owned China National Offshore Oil Company (CNOOC) in 2012.

After that sale the federal government changed foreign investment rules for state owned enterprises.

Industry consultant Joe Bradford says the timing couldn't be worse because project costs are soaring.

"If we're going to get these things built and if we're going to be getting them to market and derive the value of the resources, we've got to put a lot of capital in place to get it done properly and get it done timely," said Bradford.

It's estimated the oil and gas sector needs $400 billion in capital.

"We know our local economy, Canadian investments don't have the capacity to provide that level of investment capital into the marketplace," said Cal Dallas, Alberta's minister of International and Intergovernmental relations.

Canadians leery

A poll released by the University of Alberta's China Institutesuggests most Albertans are wary of Chinese investment.

Gordon Houlden, the director of the Institute, says there is nothing to fear.

"People were scared to death of NAFTA which has been a huge boost to Canadian prosperity."

Guy Saint-Jacques, Canada's ambassador to China, agrees more needs to be done to ease the fears of Canadians.

"We have our work cut out for us to explain. That's why I would like to translate the numbers, to say to Albertans or Canadians that there is so much money you receive from trade and thanks to investment."

One stumbling block is a foreign investment agreement signed with China but not yet ratified by Ottawa.

There is no indication of when it will be signed.


 Canada's ambassador to China, agrees more 

work needs to be done to ease the fears of

 Canadians. ["work to be done",Canadians

 dont want the Chinese here, simple]

A new poll released today by the University of Alberta's China Institute suggests the majority of Albertans don't like the idea of China buying up natural resources companies.
The poll comes as the federal government is poised to decide on a proposal from a Chinese state-owned company to buy Calgary-based energy company Nexen.
The poll, conducted about two weeks before the oil-giant CNOOC made its friendly bid for Nexen public on July 23, asked Albertans for their attitudes toward China. Topics included trade, investment and even learning to speak Chinese.
The telephone survey's 1,200 participants were split evenly between Calgary, Edmonton and the rest of Alberta.
The survey found 59 per cent were in favour of exporting energy to China, with just 17 per cent opposed and 24 per cent not sure, but that support started to drop when it came to Chinese investment in the oil patch.
Participants were evenly split (37 per cent in favour, 36 per cent opposed) on whether they liked the idea of China having partial ownership in an Alberta resource company, but the majority — 64 per cent — were against full ownership. Just 15 per cent supported full ownership by China, with 21 per cent neither supporting nor opposed.
The federal government is expected to say soon whether the CNOOC-Nexen deal can go ahead or not. The deal was approved by Nexen shareholders Sept. 20.
Industry Canada turned down another proposed takeover by a state-owned enterprise late last week, when it rejected a $6.38-billion bid by Malaysian-owned oil company Petronas for Progress Energy.
In commenting on the government's decision Monday, Prime Minister Stephen Harper promised new guidelines soon on these type of takeover bids.
The poll was conducted by the University of Alberta's Population Research Lab. It is considered accurate within 2.8 percentage points, 19 times out of 20.