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Just how much of Canada’s vast oil and gas wealth is Prime Minister Stephen Harper’s Conservative government prepared to put in the hands of China’s state-owned firms or other foreign actors? It’s a question that has been raised not only in Parliament, but also in the Alberta premier’s office and in corporate suites across the country, amid growing concern over China’s bid to buy Nexen Inc., a firm with interests in the western oilsands.
China’s ambassador, Zhang Junsai, makes a spirited case that “Chinese investments should be encouraged” to put Canada-China trade on a sounder footing and to help raise the $200 billion needed to develop the oilsands in the coming decades. Moreover, the Chinese National Offshore Oil Corp.’s proposed $15.1-billion buyout is a friendly one, laced with promises to make Calgary the head office for all of the firm’s operations, to list shares on the Toronto Stock Exchange and to keep the current management and workforce.
Still, many Canadians worry about the implications of this deal. Harper himself acknowledges that the bid “raises a range of difficult policy questions, difficult forward-looking issues.”
Meanwhile, Alberta Premier Alison Redford, while supportive, wants Ottawa to insist that CNOOC guarantee that Canadians will hold half of Nexen’s board and management positions, according to media reports. And from the oilpatch, Murray Edwards, chair of Canadian Natural Resources Ltd., rightly sees a need to maintain “a strong Canadian presence in the oilsands because it’s such an immense resource for the country.”
There’s a growing sense that while some Chinese investment is welcome, Ottawa should set out markers as it weighs this deal. Many in Canada’s corporate boardrooms feel Canadian firms should have reciprocal access to the Chinese market. That Nexen should continue to operate like a private sector company, not an arm of the Chinese government. And that any deal should be good for jobs and the environment.
Broadly, Harper has promised to draw up “a pretty clear policy framework” that will preserve “a strong Canadian presence in the oilsands” while providing more clarity for investors. That sounds good in principle. In practice the Tories are making policy behind closed doors. In Parliament this past week they voted down a New Democrat motion supported by the Liberals to hold public consultations on these issues. The NDP has now called for the bid to be rejected. That won’t ease anxiety in the oilpatch.
China’s state-owned CNOOC isn’t alone. India, Japan, Korea, Malaysia and other countries have invested here via state-owned firms, or propose to do so. We need to clarify the rules.
By doing so without public consultation and consensus, Harper is running a political risk. Before Ottawa approves the Nexen sale, Canadians will want answers to some pressing questions.
Is there a limit to how much of the oilpatch Ottawa is prepared to let fall into foreign hands? Polls suggest that 3 in 4 Canadians worry about losing control of our resources.
Would the Conservatives be prepared to “fence off” Canada’s larger companies — Suncor Energy Inc., for example, or Canadian Natural Resources Ltd. — against takeover by foreign state-owned firms? Nexen is a relatively small player. But the CNOOC bid is a test case.
Should Ottawa insist that resource companies and infrastructure be Canadian owned and controlled, limiting foreign ownership as is the case with banks?
Should Ottawa bar countries such as China that operate state-owned firms from owning more than a minority share in any Canadian firm, through whatever web of state agents they may run? Will Ottawa require state-owned firms to follow the same rigorous corporate governance and transparency rules as private firms?
Will Ottawa demand reciprocity? Should a Chinese firm be allowed to do here only what Canadian firms can do there? Should Canada have a state-owned company of its own that would hold strategic investments in key oilpatch players?
However the Nexen deal plays out, these are issues on which Canadians expect answers, and clarity. The nation’s resource wealth is at stake. If ever a decision by the government required more transparency and debate, this is it.
For the web version of this editorial, please go to the Toronto Star website: http://www.thestar.com/opinion/editorials/article/1267700–china-s-nexen-bid-calls-for-a-public-debate