Canada's Flaherty says no direct China talks on M&A reciprocity

Wed Oct 24, 2012 2:24pm EDT
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By David Ljunggren and Jeffrey Jones

OTTAWA/CALGARY (Reuters) - Canadian Finance Minister Jim Flaherty said on Wednesday he knew of no direct talks between Ottawa and Beijing about making approval of CNOOC Ltd's bid for Nexen Inc conditional on the approval of Canadian deals in China.

Legislators in the ruling Conservative Party, suspicious of allowing Chinese state-owned firms to buy Canadian energy assets, say Canada should demand concessions in return for approving the proposed $15.1 billion purchase.

Officials say the government intends to put pressure on China to resolve delays and problems that companies such as Bank of Nova Scotia and Manulife Financial Corp are experiencing with their Chinese operations.

"There have been no direct discussions on that subject of which I am aware," Flaherty told reporters in response to a question about reciprocity.

The government has come under pressure to clarify its position on foreign investment after a shock decision to block a bid by Petronas for Progress Energy last week. Many saw that veto as raising the risk of CNOOC's bid also being rejected.

Flaherty said work was being done to clarify foreign investment rules and stressed that substantial capital was needed for major projects in the oil-rich western province of Alberta and elsewhere.

Prime Minister Stephen Harper said on Monday he wanted to unveil a new framework for investment rules at the same time as announcing a decision on both the CNOOC and Petronas bids.

Earlier this month Industry Minister Christian Paradis - who on paper is in charge of the review process - extended the probe into the CNOOC bid by 30 days to Nov 9. Paradis told Reuters on Wednesday he could say nothing about the process and said Ottawa would take the time needed to study the bid.   Continued...

Canada's Finance Minister Jim Flaherty takes part in a news conference in Ottawa October 24, 2012. REUTERS/Blair Gable