OTTAWA (Reuters) - Chinese Commerce Minister Chen Deming will visit Canada next week as Ottawa deliberates whether to approve a landmark $15.1 billion takeover of oil producer Nexen Inc by state-owned Chinese oil company CNOOC Ltd.
CNOOC said it did not expect Chen to raise the sensitive takeover bid during talks with the Canadian government. Canada China Business Council president Peter Harder, however, said he would not be surprised if Chen mentioned it in a speech to his group next Tuesday.
Although Canada is seeking substantial foreign investment in its oil and gas industry, the CNOOC move is raising concern inside cabinet, where some members are wary of letting a Chinese state-owned enterprise buy up domestic assets.
Industry ministry officials are looking closely at the bid to determine whether it is of net benefit to Canada.
Separately, Canada's spy service said some foreign state-owned enterprises could pose a threat to national security. It did not mention China by name.
Canadian Trade Minister Ed Fast gave little away when asked about a planned meeting with Chen in the next few days.
"I do expect it will be a productive meeting as we move the Canada-China relationship forward," he told reporters on Friday.
Nexen - whose shareholders voted to accept the CNOOC deal on Thursday - said it was unaware of Chen's visit.
A spokesman for CNOOC said it did not expect Chen and Fast to discuss the bid "because this is transaction between two commercial companies, not a government to government affair". The Chinese embassy was not immediately available for comment.
China's Ministry of Commerce is responsible for authorizing investments of more than $100 million by state-owned enterprises.
When Chen addresses a lunch arranged by the Canada China Business Council next week in Toronto, he could well talk about the CNOOC bid, council president Harder said, noting the minister had done so in a speech in Beijing last week.
"I think he would express the view that the transaction should be looked at as a business transaction and be seen on its merits and that China would hope that that would be the case," he told Reuters in a phone interview.
Harder said that in Chen's Beijing speech last week, he had mentioned a foreign investment promotion and protection agreement signed by Canada and China this month as well as China's willingness to broaden economic relations between the two countries.
Canada says it needs C$630 billion ($643 billion) in investment in its energy sector over the next decade. It is also promoting the idea of oil sales to China.
Critics of the CNOOC deal point out that China is running a large trade surplus with Canada. They also complain Canadian natural resources companies find it hard to operate in China.
Canada's spy service, in a report issued on Thursday, said some bids by state-owned enterprises to gain control over strategic sectors of the Canadian economy could threaten national security interests.
"The foreign entities might well exploit that control in an effort to facilitate illegal transfers of technology or to engage in other espionage and other foreign interference activities," the Canadian Security Intelligence Service (CSIS) said.
"CSIS expects that national security concerns related to foreign investment in Canada will continue to materialize."
Pressed about the report, Fast said Canada always took security into account when negotiating economic deals. "It would be our top priority to ensure Canada remains safe and secure," he said.
Prime Minister Stephen Harper said last month that public opinion would play a role in determining whether to approve the bid or not.
The official opposition New Democratic Party says it is concerned about a Chinese state-owned firm buying what they call a strategic Canadian asset. Nexen controls less than 5 percent of the crude-rich tar sands in the western province of Alberta, one of the world's biggest oil deposits, where its Canadian properties are concentrated.
Additional reporting by Rod Nickel in Winnipeg; Editing by Peter Galloway