The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.
Campbell Clark writes about foreign affairs from Ottawa
Meet the new boss: Jiang Jemin, the 55-year-old chairman of China National Petroleum Corp. He’s about to become an Alberta employer.
This week, Athabasca Oil Sands Corp. triggered an option on a 2009 deal with CNPC subsidiary PetroChina, so the Chinese oil giant is not just a shareholder but also the owner and operator of the MacKay River oil sands project, to open in 2014. In December, another Chinese firm, Sinopec, closed a $2.2-billion deal for Daylight Energy Ltd.
This is new and will have a lasting impact. Chinese firms aren’t just buying stakes, they’re buying whole operations. It’s a new phase of China’s step-by-step Canada strategy. It will change not just the oil patch but Canada’s foreign policy. And a game of international energy politics is afoot in Canada’s West.
These deals are different because Canadians will see how Chinese firms operate, not just invest. They’re state-controlled companies, with executives such as Mr. Jiang who have moved among the Communist Party, government and big oil. Some fears, though not all, can now be tested; such as suggestions they will flout environmental or labour standards. They’re about to be Canadian employers, and may eventually be important ones.
It’s also a step in a strategy that’s not complete. The Chinese have tested the waters in Canada for six years, first with small deals that didn’t require government approval, then bigger deals that did, but only for part-ownership. Now it’s full ownership.
But after $2-billion deals, a $10-billion deal for a Canadian energy giant is surely next, though perhaps not for a few years.
“The question is whether the political appetite would be there,” said Goldy Hyder, general manager of Hill & Knowlton in Ottawa, and a lobbyist for Canadian and Chinese clients on big energy deals. “And whether companies have done the right thing to get the social licence.”
In other words, Canadians will have to be convinced that Chinese state companies should be allowed to own big chunks of their natural resources, and not fear Beijing’s influence in Canada, or rapacious exploitation of the resource to fuel Chinese industry, or bad corporate behaviour. The public image of China and Chinese companies will matter.
What does China want? There’s no pipeline to the West Coast, so Alberta bitumen can’t be shipped to China, yet. In part, Chinese companies are making a financial investment.
But China is also obsessed with energy security. It sees meeting the rapidly rising energy demands of its industry as key to sustaining its economic growth.
China wants technology to help extract their own hard-to-reach resources, especially natural gas. But it also wants diverse imports as protection against disruptions in supply from conflict or politics. It’s building pipelines, in part to ensure that less of its supply comes through the narrow Strait of Malacca, which, in theory, could be choked off by conflict or even piracy.
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/politics/chinas-oil-sands-deal-will-have-lasting-impact/article2292009/