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PM to block further Chinese ownership in oil sands

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

Oliver reiterated that Monday.

"The percentage of state-owned, Chinese-owned, investment in the oil sands in terms of future production will still be under 10 percent and so we didn't feel with the acquisition the number was excessive. But new rules are now in place," Oliver said.

Most analysts believed the Nexen deal would be approved because more than 70 percent of Nexen's assets are outside Canada. Analysts say a company like Suncor, Canada's largest oil company, would have been off limits.

The government is now saying mid-tier companies like Nexen will also be off limits. Oliver, however, said non-controlling minority interests proposed by foreign state-owned companies, including joint ventures, will continue to be welcome in the development of the oil sands.

David Collyer, the president of the Canadian Association of Petroleum Producers, said the Harper government struck a reasonable and pragmatic balance in making its decision on Friday.

"It's an outcome that we think will enable continued growth in the sector and continue to attract investment capital," Collyer said.

CNOOC and other big state-owned Asian energy companies have increased purchases of oil and gas assets in the Americas as part of a global strategy to gain access to resources needed to fuel their economies. Chinese companies have moved more carefully since CNOOC tried seven years ago to buy Unocal but was rejected by U.S. lawmakers who cited national security fears.

But Harper lobbied the Chinese to invest in Canada's energy sector in recent years and has said billions in foreign investment is needed to develop Canada's vast oil and gas deposits. Turning down CNOOC's bid would have harmed relations with China.

Nexen operates in western Canada, the Gulf of Mexico, North Sea, Africa and the Middle East, with its biggest reserves in the Canadian oil sands. The acquisition vastly expands CNOOC's holdings in Canada, where the company has already invested about $2.8 billion.

Nexen's board approved the takeover in July after CNOOC offered a 62 percent premium on the stock price. Shareholders voted overwhelmingly to support the deal in September.

Shares of Nexen jumped almost 14 percent, or $3.28, to $26.80 in afternoon trading on the New York Stock Exchange.

The deal still needs approval in Britain and the U.S.