Where are the gains for Canada in CNOOC-Nexen deal? – by Claudia Cattaneo (National Post – July 27, 2012)posted in Canadian/International Media Resource Articles, Oil and Gas Sector-Politics and Image |
The National Post is Canada’s second largest national paper.
Encouraged by federal and provincial government overtures, Canada’s vague ‘net benefit’ test for foreign transactions and Canadians’ general indifference to the deluge of foreign deals in the oil patch, China’s state-controlled CNOOC Ltd. bid US$15.1-billion this week for Nexen Inc. with confidence it will get Ottawa’s green light.
China’s boldest step yet into Canada is drawing plenty of support from those who see it as just another foreign purchase in a country that is open for business, needs new markets in Asia for its oil and gas, needs the capital to develop its resources, wants to be friends with China and is itself a big investor abroad.
What’s missing is the big picture, and for Canada it’s not an encouraging one. Stand back and you’ll see that CNOOC’s purchase of Nexen is not just another foreign takeover and must not be viewed in isolation.
There’s big politics at play, and Canada has to be careful not to overplay its hand. Canada has been courting increased trade with the Chinese as part of Prime Minister Stephen Harper’s agenda to make Canada an energy superpower, while reducing its dependence on the volatile United States. The danger? Canada is being squeezed by two giants, China and the United States, and rather than being the player, it is being played.
The U.S. has dominated Canada’s energy industry since it began and its rejection this year of the Keystone XL oil sands pipeline is just one example of how it throws its weight around.
Now, China’s presence is growing and there is more to come if the Nexen deal is allowed. Consider the implications of a takeover of Canadian Oil Sands Ltd., one of the companies seen as next in line for a Chinese bid. It would put the Chinese government in the driver’s seat of one of Canada’s most strategic projects, Syncrude. Canadian Oil Sands has a 36.74% stake; China’s Sinopec already owns 9.03% and CNOOC is taking over Nexen’s 7.23% share.
The upshot is a home-run for China in America’s backyard, a more complicated neighbour for the U.S. For Canada, it means less freedom to look out for its own interests.
CNOOC has cleverly cast its bid as a market-driven transaction. It’s pushing all the right buttons with promises of keeping all Nexen’s employees, expanding its Calgary headquarters, and listing its shares in Toronto.
For the rest of this column, please go to the National Post website: http://business.financialpost.com/2012/07/27/where-are-the-gains-for-canada-in-cnooc-nexen-deal/