09 december 2012
Major changes in Canadian Energy Industry
Staff members at CNOOC stand during an exhibition in Beijing, in March 2012. THE CANADIAN PRESS/AP, Imaginechina
Friday afternoon, the Canadian government approved two major energy deals: the $15.1-billion takeover of Nexen Inc, based in Calgary, Alberta by the state-owned China National Offshore Oil Company (CNOOC) and, the $6.5-billion bid by Malaysian state-owned firm Petronas for Progress Energy Resources, also based in Calgary.
Reaction has been mixed with many Canadians writing and calling into radio and television programs to express their disapproval. But John Manley, CEO of the Canadian Council of Chief Executives wrote in a news release, “It is good for our economy, good for job creation and increases competition, which in turn strengthens productivity. Manley said, "Canada welcomes foreign investment because it is good for our economy.”
In his announcement, however, Prime Minister Stephen Harper said these decisions "are not the beginning of a trend but rather the end of a trend. When we say Canada is open for business, we do not mean that Canada is for sale to foreign governments" Harper said.
The government took advantage of the occasion to announce new guidelines for takeover bids and said future bids by state-owned enterprises will be allowed only on “an exceptional basis” And the threshold at which foreign state-owned enterprises require approval will remain at $330 million.
There are no details available yet. Peter Julian the NDP’s energy critic said “In the past, these kinds of takeovers have resulted in job losses." But Liberal Member of Parliament, John McCallum said it was the right decision, and asked "What conditions are there? Is there any degree of reciprocity? How are we to make sure the Chinese maintain their commitments? Is there a mechanism to make sure that they do?
We’ll have more on the reaction to this change in the Canadian energy landscape next week, but here is Prime Minister Stephen Harper’s announcement on Friday afternoon:
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