TORONTO (AP) -- Canada approved China’s biggest overseas energy acquisition, a $15.1 billion takeover by state-owned CNOOC of Canadian oil and gas producer Nexen, but vowed Friday to reject any future foreign takeovers in the oil sands sector by state-owned companies.
Prime Minister Stephen Harper said the government would only consider future takeover deals in the oil sands by state-owned companies in exceptional circumstances.
“To be blunt, Canadians have not spent years reducing ownership of sectors of the economy by our own governments only to see them bought and controlled by foreign governments instead,” Harper said.
Harper’s Conservative government has been studying whether CNOOC’s deal and a smaller foreign takeover, Malaysian state-owned oil firm Petronas’ $5.2 billion bid for Progress Energy, represent a “net benefit” to the country. The Harper government also approved the Petronas deal on Friday.
Concerns had been raised that approvals could lead to a flood of deals that put control of Canada’s vast energy resources in Chinese hands, but Harper said the approvals should be seen as the end of a trend and not the beginning. He said no other industrialized country would allow a major sector of its economy to be taken over by state-owned companies from another country.
The prime minister noted that 15 companies dominate production in the Alberta oil sands and said the sector represents 60 percent of all the oil production around the world that is not already in state hands. He feared a few larger purchases by foreign state-owned companies could rapidly transform the industry from one that is essentially a free market industry to one that is effectively under the control of a foreign government.
Canada’s new position may not go over well in China where they are eager for an even greater share of Canada’s oil. Alberta has the world’s third-largest oil reserves after Saudi Arabia and Venezuela: more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025.
CNOOC and other big state-owned Asian energy companies have increased purchases of oil and gas assets in the Americas as part of a global strategy to gain access to resources needed to fuel their economies. Chinese companies have moved more carefully since CNOOC tried seven years ago to buy Unocal but was rejected by US lawmakers who cited national security fears.
Harper’s government originally turned down Petronas’ bid for Progress Energy in October. The government did not publicly explain the decision to block the deal but said a new policy framework for foreign takeovers would be released soon. Petronas was allowed to reapply.
The decision to turn it down in October raised doubts about whether Canada is open to foreign investment.