PM to block further Chinese ownership in oil sands

Published on NewsOK Modified: December 10, 2012 at 2:19 pm •  Published: December 10, 2012
Advertisement
;

TORONTO (AP) — Canada's prime minister said Monday it's "extremely unlikely" his government will allow any more foreign takeovers in the oil sands sector by state-owned companies.

Prime Minister Stephen Harper's Conservative government approved China's biggest overseas energy acquisition on Friday, a $15.1 billion takeover by Chinese-state owned CNOOC of Canadian oil and gas provider Nexen. Harper also approved a smaller deal, Malaysian state-owned oil firm Petronas' $5.2 billion bid for Progress Energy.

But Harper vowed Friday reject any further foreign takeovers in the oil sands by state-owned companies unless there are "exceptional circumstances." He didn't elaborate.

On Monday he went even further.

"I think we have been very clear that controlling interest takeovers by foreign governments in the oil sands are extremely unlikely to be approved by this government in the future," Harper said in Parliament.

Natural Resource Minister Joe Oliver also stated Monday that foreign control in the oil sands sector by state-owned companies has reached its limit. He said CNOOC's takeover likely would not have been approved under new tougher new foreign investment rules.

Concerns had been raised that the approvals could lead to a flood of foreign takeovers that put control of Canada's vast energy resources in China's hands.

Harper said the markets and Canadians are supportive of Canada's new rules.

"Canada is open for business, but that does not mean that Canada is open for sale to foreign governments," Harper said.

Canada's new foreign takeover rules may not go over well in China where they are eager for an even greater share of Canada's oil. Alberta has the world's third-largest oil reserves after Saudi Arabia and Venezuela: more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025.

Harper said Friday the Nexen deal by itself was OK, but said the potential for more takeovers raised alarms.

The prime minister noted that 15 companies dominate production in the Alberta oil sands and said the sector represents 60 percent of all the oil production around the world that is not already in state hands. He feared a few larger purchases by foreign state-owned companies could rapidly transform the industry from one that is essentially a free market industry to one that is effectively under the control of a foreign government.

Continue reading this story on the...