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Canada approves energy takeovers

Prime minister vows to block future foreign takeovers after Chinese and Malaysian state-owned firms buy oil companies.
Last Modified: 08 Dec 2012 21:01

Canada has approved two major takeovers of energy firms by Chinese and Malaysian state-owned bidders but vowed to reject any future foreign takeovers

Prime Minister Stephen Harper on Friday announced regulatory approval for Chinese CNOOC's $15.1bn takeover of oil and gas company Nexen, and Malaysian Petronas' offer for gas producer Progress Energy Resources, estimated at $5.5 billion.

Harper said his government would only consider future takeover deals in the oil sands by state-owned companies in exceptional circumstances.

"To be blunt, Canadians have not spent years reducing ownership of sectors of the economy by our own governments only to see them bought and controlled by foreign governments instead," Harper said.

The acquisition is China's largest-ever foreign takeover.

Canada has the world's third-largest oil reserves [AFP]

Harper said the two takeovers represented a "net benefit" to the country.

Al Jazeera's Daniel Lak, reporting from Toronto, said: "The Canadian government knows the country does not have enough capital on its own to develop its vast oil reserve."

Concerns had been raised that approvals could lead to a flood of deals that put control of Canada's energy resources in foreign hands, but Harper said the deals should be seen as the end of a trend and not the beginning.

"I do not believe that any major industrialised country would allow a major sector of its economy to be transformed into the property of a foreign government through a couple of transactions,'' he 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.

The Canadian province of Alberta has the world's third-largest oil reserves after Saudi Arabia and Venezuela.

Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025.

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Source:
Al Jazeera and agencies
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