Analysis: Canada ruling Conservatives split over CNOOC's bid for Nexen

Wed Sep 26, 2012 7:14pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By David Ljunggren and Randall Palmer

OTTAWA (Reuters) - Canada's ruling Conservative Party is split over a landmark $15.1 billion bid by China's CNOOC for oil producer Nexen, leaving Prime Minister Stephen Harper with a difficult final call to make.

A green light, still viewed by many as likely, would allow China's biggest ever foreign takeover, extend China's foothold in Canada's crude-rich oil sands - an area with the biggest proven resources of energy outside Venezuela and Saudi Arabia - and help Beijing fulfill its drive for better access to energy resources to fuel the world's second-largest economy.

A "no", or conditions on the deal that were too onerous for CNOOC, would cut the takeover premium on Canadian resource stocks, and likely stem Chinese investment in the energy patch, as well as damaging Canada's already dented reputation as a friendly jurisdiction for foreign investment.

It would also infuriate Beijing, which might make the Chinese market a less welcoming destination for Canadian exporters. When U.S. opposition thwarted CNOOC's attempt to buy California-based Unocal Corp in 2005 it angered Chinese officials and strained Sino-U.S. relations.

But while the Canadian government insists it is open to foreign investors, despite its shock rejection of BHP Billiton Ltd's $39 billion bid for Potash Corp in 2010, many in the Conservative Party say a deal with a state-owned Chinese firm is problematic and needs to be subject to restrictions.

Harper, who usually brooks no dissent from his legislators, faces a caucus where many are openly nervous about the idea of a Chinese state-owned company buying up part of the crude-rich tar sands.

"There's a lot of people, I would say the vast majority of the country, that are very concerned about making sure there's conditions (on CNOOC)," said Rob Anders, a Conservative member of Parliament from Alberta, where the oil sands are located. He told reporters on Wednesday that he regarded China as "a non-benevolent actor and a strategic adversary."

One of the reasons the deal may get approved is that Harper went to Beijing in February to sell the idea of China buying Canadian oil and investing in Canada. Rejecting the CNOOC bid would seemingly make a mockery of his strategy.   Continued...