On CNOOC-Nexen deal, Canada minister points to investment pact

Fri Nov 30, 2012 2:47pm EST
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By Randall Palmer

OTTAWA (Reuters) - A Canadian cabinet figure known to have reservations about CNOOC Ltd's bid to buy Nexen Inc said Friday that at least some of Canada's concerns about getting reciprocal treatment from China had been addressed by an investment pact.

In his remarks, Immigration Minister Jason Kenney also underscored Prime Minister Stephen Harper's concerns about takeover bids by foreign state-owned enterprises. He said Harper had stressed the importance of preserving Canadian values, such as human rights, in dealing with China.

The remarks highlighted the depth of a government debate over whether to approve state-owned CNOOC's plan to buy the energy producer.

Shares of Nexen, which had advanced before Kenney spoke, erased some gains afterwards, only to surge again by midday, presumably as the market looked more towards the positive nuances in his remarks, rather than the negative.

Investors have been trying to gauge whether the Conservative government's desire for foreign investment and good ties with China will outweigh an intrinsic distrust of the Communist government.

One of the concerns with China's $15.1-billion bid is the possibility that Beijing will scoop up large chunks of Canada's natural resource sector and may not operate purely from commercial motives.

Harper has stressed repeatedly to Chinese officials that the economic relationship must be a two-way street. Kenney suggested the recent investment agreement had addressed that issue, at least in part.

"One of the key reasons why we finalized the Foreign Investment Protection and Promotion Agreement (FIPPA) after 18 years of negotiations is to provide for a degree of reciprocal protection for investment on both sides," said Kenney, whose reservations about the deal stem, in part, from his concern over human rights.   Continued...

Canada's Immigration Minister Jason Kenney speaks during Question Period in the House of Commons on Parliament Hill in Ottawa November 29, 2012. REUTERS/Chris Wattie