|An oil refinery in western Canada|
The announcement on Monday that Calgary-based Nexen Inc., Canada’s 12th-largest energy company, had agreed to a $15.1-billion takeover by the state owned China National Offshore Oil Co. Ltd. has added fuel to an ongoing debate among Canadians as to how much Chinese investment in our country is too much.
It doesn’t help that the deal, which will be subject to a vote by shareholders on Sept. 12, is the largest-ever acquisition of a Canadian firm by China. This is just the latest in a long list: Earlier this year, PetroChina Co., China’s largest oil producer (also state-owned) obtained full ownership of the MacKay River oilsands project — another first — by taking up Athabasca Oil Sands Corp.’s remaining 40 per cent stake in two projects (it had acquired the first 60 per cent in 2011); in fall of 2011, China Petrochemical Corp. (Sinopec) acquired Daylight Energy Ltd. for $2.2 billion; in summer the same year, CNOOC acquired oilsands operator Opti Canada for $2.1 billion.
China’s multibillion-dollar investments in Canada’s oil, mineral, and energy sectors is not unusual, given the amounts of energy and raw materials it needs to sustain its growing economy. Nor, for that matter, is it unique. Other capital-rich Asian investors, including Malaysia’s state-owned oil company Petronas, have invested heavily in that sector of our economy. However, the idiosyncrasies in China’s economy and political system make it essential that we fully assess the potential implications of allowing China to gradually take over a major segment of our resources.
My op-ed, published today in the Ottawa Citizen, continues here.