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OTTAWA and TORONTO — Top oil industry executives are asking Ottawa for rules to protect Canadian ownership of major oil sands companies from a flood of foreign investment expected in the sector.
Canada’s oil sands contain the third-largest crude oil reserves in the world and are a strategically critical resource for the country, industry executives argue. They support the proposed $15.1-billion acquisition of Nexen Inc. by China’s CNOOC Ltd., but note the deal signals growing foreign interest in the oil sands and insist Ottawa needs to ensure a substantial level of domestic ownership as more deals loom.
“I think it is important to get some ground rules in place before the next one,” said Murray Edwards, CEO of Canadian Natural Resources Ltd., one of Canada’s biggest energy companies and a major oil sands player. Mr. Edwards was among a large contingent of top executives gathered in Ottawa for a two-day session on how Canada should position itself to take full advantage of the growing economic power and affluence of Asia.
That power is centred in China, whose hunger for more opportunities in the Canadian oil patch is forcing Canada to shape its foreign-investment policy. At the Ottawa conference, oil executives were warned that a surge of direct foreign investment from China and other countries is just beginning to reach these shores and that. Canadians are unprepared for fundamental changes it will bring.
“There is a tidal wave that is heading out of China in the next decade and I don’t think we’re ready for it,” said University of Toronto economist Wendy Dobson, noting Chinese firms will be looking to invest more than $1-trillion in the coming decade to acquire access to resources and related technology.
Most executives endorse the proposed takeover of Nexen, which has operations in the oil sands among other energy holdings abroad, but say it highlights the need for clear guidelines on big takeovers. Canadian Natural’s Mr. Edwards said foreign investment is good for the energy industry and good for the country, but he added there should be limits to what Ottawa is prepared to approve given the strategic importance of the oil sands and major companies in the sector. Mr. Edwards said the CNOOC-Nexen deal is a “preliminary match” that is likely to get approved, though the government may opt to impose some conditions.
“Some Chinese investment in the oil sands would be in our country’s interest,” said Mr. Edwards, a leading industry figure with ties to Prime Minister Stephen Harper. “We want to make sure we have access to capital but, as a country, we want to ensure a strong Canadian presence in the oil sands.” Mr. Harper said said that the government will set out guidelines for foreign acquisitions by state-owned enterprises when it announces its decision on the proposed Nexen takeover.
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