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December 07, 2012

Canada approved China's takeover of Nexen Oil but will Block future foreign takeovers

Canada approved China's biggest ever foreign takeover on Friday, the $15.1 billion bid from CNOOC Ltd for energy company Nexen Inc., but drew a line in the sand against future buys by state-owned enterprises.

"To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead," Harper told reporters after Ottawa gave the deal the green light, along with approval for the less controversial takeover of gas company Progress Energy Resources Corp by Petronas of Malaysia.

"Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada," he added.

The strict new approach restricts state-owned enterprises to minority stakes in Canadian enterprises except in what Harper described as "exceptional circumstances".

It will raise questions about how Canada can raise the C$650 billion ($657 billion) investment it says it needs in the natural resources sector in the next decade alone. Ministers say much of the money will have to come from abroad and cash-rich China is an obvious source.




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