CNOOC bid for Nexen raises tough issues: Canada PM

Fri Oct 5, 2012 12:06am EDT
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By David Ljunggren and Randall Palmer

OTTAWA (Reuters) - Canada said on Thursday that a $15.1 billion Chinese bid for domestic oil company Nexen Inc raised difficult policy questions, but the government gave no sign it would bow to an opposition demand to veto the deal.

Speaking hours after the main opposition party demanded a veto on CNOOC Ltd's bid, Prime Minister Stephen Harper said the government would look at a range of issues in determining whether the deal, the largest foreign takeover ever launched by a Chinese firm, would be of net benefit to Canada.

The deal has also raised rare public signs of unrest among Conservative legislators, some of whom fret about the idea of a Chinese state-owned enterprise buying Canadian energy assets.

"This particular transaction raises a range of difficult policy questions, difficult and forward-looking issues. Those things will all be taken into account," Harper told reporters in Ottawa, when asked about the bid.

Fund managers and market analysts say they expect Ottawa to approve the deal, though not without conditions.

These could include seeking guarantees on employment and investment, requiring that CNOOC promise to follow Canadian laws and practices and demanding that a certain number of Canadians be appointed to the board of directors.

"Our position has been to be generally welcoming of foreign investment, but at the same time as you know we have approved many transactions, we have significantly modified some, and we have blocked some transactions," said Harper.

Canada, a leading energy exporter, has the world's third-largest proven oil reserves, most of them in the western province of Alberta.   Continued...

A man walks into the Nexen building in downtown Calgary, Alberta, July 23, 2012. REUTERS/Todd Korol