"Patently unwise" for Canada to reject China money: ex-minister

Wed Nov 14, 2012 1:34pm EST
 

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Canada should not reject Chinese investments in its oil industry out of hand because China offers an important outlet as Canada seeks to broaden the market for its crude oil supplies, a former government minister said on Wednesday.

Jim Prentice, vice chairman for Canadian Imperial Bank of Commerce (CM.TO: Quote) and a former member of Prime Minister Stephen Harper's cabinet, made his remarks as Ottawa reviewed the $15.1 billion takeover bid by China's state-owned CNOOC Ltd (0883.HK: Quote) for Nexen Inc NXY.TO.

Prentice said Canada must remain open for business and realize that much foreign investment will be made by sovereign wealth funds and state-owned enterprises from both democratic and non-democratic countries.

The Harper government has intensified efforts to open up new markets for Canadian oil in China and throughout Asia to reduce reliance on the United States as its sole export market, in hopes of boosting returns for fast-growing oil sands production.

"In such an environment, saying 'no thanks' to the largest new market opportunity, namely China, would be patently unwise -- particularly in circumstances where the transactions do not imperil Canadian values or environmental and labor laws," Prentice said in notes for a speech to a major energy conference in London.

"One can fairly expect Prime Minister Harper to move with care and dexterity, balancing Canada's internal political concerns about foreign investment with the imperative to develop out its 'strategic partnership' with China and demonstrate progress on the need for reciprocity," he said.

Early this month, Ottawa extended its deadline for ruling on the takeover of Calgary-based Nexen by CNOOC to December 10. The government is scrutinizing the contentious deal under guidelines for state-owned enterprises that Prentice drafted as minister of industry five years ago.

Canada blocked Malaysian state oil firm Petronas's C$5.2 billion ($5.2 billion) bid for Progress Energy Resources PRQ.TO, a natural gas producer, on October 20, but rather than completely ruling the deal out, it offered Petronas 30 days to make new representations to the government.   Continued...