The big energy news over the past month has been the proposed takeover of Nexen Inc, Canada's No 5 oil producer, by China National Offshore Oil Corporation (CNOOC). CNOOC is China's third largest oil company and one that focuses on offshore energy exploration and development.

The deal is worth $15 billion, making it the largest foreign purchase by a Chinese firm. It was formally submitted to the Canadian government for approval last Wednesday, with CNOOC promising jobs and investments galore, a new North American headquarters in Calgary, a listing on the Toronto Stock Exchange, and a sale price for Nexen that would leave lucky executives and shareholders laughing all the way to the bank.

Government and industry sources familiar with the deal say if the simple sale of Nexen to CNOOC were the only consideration, federal approvals would be hardly more than a formality. But inside Canada's Conservative government, sources say there are growing concerns that approving such a huge takeover could open the door to a shopping spree for other Canadian energy companies by a cash-rich, resource-thirsty and "undemocratic" China. Canadian authorities are worried that the Nexen deal could become the regulatory template for China's purchase of other oil companies at the core of Canada's economic engine. How could the Canadian government say "yes" to  the sale of Nexen and "no" to others?



Published 5.9.2012
China Daily

The author is former secretary for home affairs of the Hong Kong SAR government.