China's Taking Over in Canada

Smoky Lake Signal Article No. 249 (December 12, 2012)

Whispering in the Wind

On more than one occasion I’ve been labeled as a person who “rants and raves” when a political issue becomes contentious.  There is no doubt in my mind I’m passionate, particularly when I’m being duped by political leaders – and being duped by political leaders appears to be happening all too often these days.  Take for example the NEXEN deal:  On Friday Prime Minister Harper announced that his government (in all its wisdom) was approving the purchase of NEXEN Inc by the China National Offshore Oil Corporation (CNOOC) and the deal would likely be of net benefit to Canada.  To curb any criticism that the NEXEN deal was the beginning of a Chinese takeover of Alberta’s oil sands, Mr. Harper offered a number of confusing, if not contradictory comments at his press conference.  The prime minister indicated that the purchase of NEXEN by a Chinese state owned enterprise is “not the beginning of a trend, but rather the end of a trend….When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments.”  Mr. Harper also offered a very confusing summary when he indicated that future takeovers by state owned enterprises (like CNOOC) would only be allowed under “exceptional circumstances.”  When asked by reporters to give further details the prime minister explained:  “What we’re saying specifically is that a transaction, an acquisition of control by a foreign state-owned enterprise in the oil sands would only be permitted under exceptional circumstances.”  In my view Prime Minister Harper’s announcements and his resulting press conference was a mish-mash of confusion, it lacked even the most basic detail and at times the prime minister offered contradictory statements without explanation – ergo, the whole thing was a dismal failure. 

Is China Big in the Oil Sands?

Last July when the NEXEN takeover bid first came to light in the press, I suggested that the CNOOC bid would be accepted and after acceptance there would be serious consequences – China would immerge as a (the) major player in oil sands development.   Reports are now suggesting that with the NEXEN factor in place, the Peoples Republic of China’s state-owned enterprises (SOE) have invested something over $30 billion in Alberta’s oil sands and in some respects are setting the agenda for further development.  Here are some examples of China’s SOE investments:  Last year Sinopec bought Daylight Energy out of Calgary for $2.1 billion – the first successful purchase of an energy company by a Chinese state-owned enterprise in North America.  PetroChina recently bought outright, Athabasca Oil Sands Corp. – China’s first purchase of an oil sands project.  A couple of years ago Sinopec purchased a 9 percent interest in Syncrude for $4.6 billion – I recently read that Sinopec vetoed a recent expansion proposal at Syncrude.  The CNOOC purchase of NEXEN for $15.1 billion brings the Long Lake oil sands project into play as a fully owned Chinese project.  And of course there are the support companies; TransCanada Pipelines is now in partnership with Phoenix Energy Holdings Ltd (a unit of China’s state owned China National Petroleum Corp.) – will the list never end?  No wonder Prime Minister Harper put his foot down and said (in his own way) enough is enough – good for you Mr. Prime Minister but is it too late?

The Alberta Connection, is There One?

In last week’s press conference I don’t know if it was ever mentioned that the oil sands that everyone is all-up-in-arms about are actually the Alberta oil sands.  Constitutionally speaking there is no question, Alberta owns the oil sands and representing that ownership is Premier Alison Redford.  From what I have read Premier Redford has been consulted with in the traditional, un-cooperative federal government fashion – talk to the provinces only when you have to.  Nevertheless Premier Redford has pressed for stronger representation for Canadians in the NEXEN-CNOOC deal – she wants 50 percent Canadian on the board and 50 percent Canadian in senior management positions.  As to whether Premier Redford and the other premiers are being consulted with on the more general and possibly more dangerous Canada – PRC investment agreement, that is another question.  In the meantime I’m getting an uncomfortable feeling that Prime Minister Harper has got his hands in Alberta’s cookie jar and there isn’t any room for anybody else.