Canada on Friday allowed a Chinese state-run oil giant to move forward with $15 billion takeover of a domestic energy company, but the government indicated that such deals might not pass muster in the future.
The deal - the acquisition of Nexen by the China National Offshore Oil Corporation, or Cnooc - is the latest effort by the Chinese government to find new sources of oil and natural gas reserves to helpdrive the country's growth.The state-run Cnooc has been active, striking severalpartnerships in Canada andthe United States.
Canada, in part, has welcomed the alliances.
Prime Minister Stephen Harper has been trying to create new markets to export Canadian energy, which is largely dependenton the United States for its exports. He has been courting China since the United States stalled approval of the Keystone XL pipeline project, which would move more oil sandsproduction to the Gulf Coast. On Friday, the governmentalso approved a $5 billion acquisition of Progress Energy Resources of Canada by Petronas, the Malaysian state-owned oil and gas company.
But the Nexen deal has also reignited the controversy over strategic assets ending up in the hands of foreign owners. Seven years ago, Cnooc gave up on an $18.5 billionbid for Unocal of the United States after political opposition. Two years ago, Sinochem, a Chinese chemicals maker, backed away from buying the Potash Corporation of Saskatchewan for similar reasons.
The Nexen bid prompted nationalistic concerns in Canada. Some conservative members of Parliament worried about Cnooc, which is an arm of the Chinese government, gaining control over energy assets generally controlled by Canadian provinces. Recognizing the sensitivity of the deal, Mr. Harper noted that foreign investment rules would be changed to block companies owned by foreign governments from acquiring properties in Alberta oil sands in all but"exceptional" circumstances.
"Canadians generally, and investors specifically, should understand that these decisions are not the beginning of a trend, but rather the end of a trend," Mr. Harper said at a news conference. "When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments."
It is not clear how the directive will play out on the deal-making front.
