ANALYSIS-Canada's foreign limits may hit oil sands growth
* Direct state control allowed only as exceptions
* Oil sands growth plans require foreign capital
* Industry welcomes clarity, sees more joint ventures
By Jeffrey Jones
CALGARY, Alberta, Dec 8 (Reuters) - New Canadian rules limiting control of its oil sands by foreign state-owned companies may turn away some investors who now covet more than minority stakes just as the industry seeks massive amounts of capital to fuel its growth ambitions.
The oil sands in western Canada, the world's third-largest crude reserve and source of much of the United States' oil imports, need an estimated C$120 billion ($121 billion) in investment in the next decade, according to the Alberta government, and the industry must tap numerous foreign sources for much of it.
However, in approving the contentious takeovers of Nexen Inc and Progress Energy Resources Corp by Chinese and Malaysian state-owned companies on Friday, Prime Minister Stephen Harper put a limit on potential money by ruling any future bids for control of oil sands businesses would be allowed only in exceptional circumstances.
"The government's concern and discomfort for some time has been that very quickly a series of large-scale controlling transactions by foreign state-owned companies could rapidly transform this industry from one that is essentially a free market industry to one that is effectively under the control of a foreign government," Harper told reporters.
The policy suggests foreign nations' state-owned enterprises must remain content with non-controlling interests in the 170-billion-barrel oil sands resource. Continued...