UPDATE 2-Canada needs foreign capital, policy talks ongoing-finmin

Fri Nov 16, 2012 5:24pm EST
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* Gov't looking at various issues related to foreign investment

* Investment guidelines seen in not-too-distant future

* Framework still being worked on, Flaherty says

* Minister says Canada needs foreign capital for oil sands

By Edward Krudy

NEW YORK, Nov 16 (Reuters) - Canada needs foreign capital to develop its oil sands and is in the "middle" of discussions on how to approach foreign takeover bids such as the $15.1 billion offer by China's CNOOC for oil and gas producer Nexen , Finance Minister Jim Flaherty said on Friday.

Ottawa is deciding whether to allow or block two major transactions by state-owned players: the bid by China's top offshore oil and gas producer for Nexen, and a $5.2 billion bid by Malaysia's Petronas for Progress Energy Resources Corp.

The issue is hugely controversial in Canada, especially when natural resources are at stake. Prime Minister Stephen Harper has said he would unveil a new policy framework for dealing with foreign takeover bids around the same time as the government announces a decision on the two deals.

Asked for his views on what the new guidelines should contain, Flaherty suggested they were not yet ready.   Continued...