Nexen takeover bid raises difficult policy questions for government, Harper says
By Jason Fekete, Postmedia News October 4, 2012
A security officer keeps watch outside the headquarters of China National Offshore Oil Corp (CNOOC) in Beijing in this February 19, 2008 file photograph. China’s top offshore oil producer CNOOC, is hoping to buy Calgary energy company Nexen. Photograph by: REUTERS/Claro Cortes IV , Postmedia News
OTTAWA — Prime Minister Stephen Harper says CNOOC’s takeover bid for Canadian energy company Nexen “raises a range of difficult policy questions” for his government as it decides whether to approve the $15-billion transaction.
The prime minister’s comments Thursday — some of his strongest yet on the issue — added more intrigue to a day that saw the NDP announce it opposes the deal as currently structured, due to what it says is a secretive review process, government’s history of “rubber stamping” deals and CNOOC’s poor track record.
The Conservative cabinet is currently reviewing, under the Investment Canada Act, whether China National Offshore Oil Corporation’s (CNOOC) $15.1-billion takeover of Calgary-based petroleum producer Nexen is of “net benefit” to Canada.
The government’s review — and the ramifications of its decision on future foreign investment and takeovers, especially in the oilsands sector — is proving to be a somewhat divisive issue within the Tory cabinet and caucus.
Harper said his government is generally welcoming of foreign investment, but he noted it has significantly modified some previous takeover bids and rejected a couple of others.
The prime minister has previously indicated public opinion, which repeated polls have shown is quickly souring on the deal, will be a factor in the government’s decision, and he reinforced that again Thursday.
“This particular transaction raises a range of difficult policy questions, difficult and forward-looking issues, and those things will all be taken into account under the Act in assessing the net benefit of this investment to this country before we take a decision. And obviously we continue to gather information and opinion on that,” Harper told reporters on Parliament Hill.
Harper said concerns raised by U.S. officials about CNOOC’s acquisition of Nexen — and the company’s assets in the Gulf of Mexico — won’t influence his government’s decision, nor will the NDP’s opposition to the deal.
“The NDP is an ideologically socialist party that’s opposed to all investment so their position on this is not a surprise,” the prime minister added.
“We do have to remember as Canadians that a lot of jobs in this country, a lot of jobs and growth depend on the investments that come to this country.”
The NDP announced its position a day after Conservatives defeated the official Opposition’s motion in the House of Commons that called for public consultation on the deal and public hearings into foreign ownership in the Canadian energy sector by state-owned enterprises such as Beijing-based CNOOC.
The party is also looking for the Harper government to fulfil its two-year-old promise to clarify the concept of “net benefit” in the Investment Canada Act.
Instead, reviews under the Investment Canada Act, like the CNOOC-Nexen transaction, are all handled in backrooms with nebulous criteria on how a decision is made, the NDP says.
“We think the concerns outweigh the benefits,” NDP energy critic Peter Julian told reporters Thursday in Ottawa as he announced the party’s position.
“We do not have confidence in the government’s ability to handle this transaction,” he added. “They’ve completely botched this file. This is a mess of the government’s own making.”
Julian maintained the NDP welcomes international investment, but said the Harper government is simply “rubber stamping” most foreign investment and takeovers, and failing to enforce approval conditions from past transactions.
The “starting point” for the NDP to support the deal is for the Conservatives to implement the details of a 2010 motion endorsed by all parties that called on the government to: amend the Investment Canada Act to include public hearings for foreign investment reviews, ensure conditions attached to an approval are made public and clarify that the goal of the Act is to attract new capital and create new jobs, among other measures.
The changes are particularly needed because of what many observers believe is a “tsunami” of foreign investment and takeovers coming to Canada, Julian said.
The official Opposition said it also has a number of specific worries about state-owned CNOOC buying a major Canadian energy company with a large stake in the oilsands, with little guarantee of reciprocity for Canadian companies trying to access the Chinese market.
Treasury Board president Tony Clement said this week the federal government would be breaking the law if it held public hearings on the deal as the opposition demands.
Harper has promised the government will release a road map governing foreign takeovers around the same time it announces its decision on the CNOOC-Nexen deal.
Alberta Premier Alison Redford said Thursday her province needs foreign investment, but noted it’s important that jobs stay in the province, economic development continues in an environmentally sustainable manner and that corporate governance of foreign companies follows Canadian standards.
“It’s important for us to welcome foreign direct investment. That has been a very large part of how our energy economy has grown in Alberta. We have provided some advice to the government of Canada with respect to that,” Redford told reporters in Edmonton.
Reports have indicated the Alberta government has provided Ottawa a list of conditions it wants included in any federal approval of the transaction, including guarantees that at least half of Nexen’s board and management positions will be held by Canadians, for CNOOC to maintain current staffing levels for at least five years and a commitment to maintain planned capital spending.
Redford said those reports are “certainly consistent” with her government’s advice to Ottawa.
The Harper government officially launched its review of the deal in late August. The government has 45 days to review the proposed takeover (which would be until mid-October), but can extend the deadline by 30 days if necessary — meaning a decision might not come until mid-November.
Nexen shareholders voted overwhelmingly last month to approve the takeover, along with its 61 per cent premium on the price of the company’s shares.
Chief executives from some of Canada’s largest energy companies have also been urging the government to adopt new rules to protect major Canadian oilsands companies from a deluge of foreign investment expected in the coming years.
As part of the proposed acquisition, CNOOC has promised to make Calgary its North and Central American headquarters, retain Nexen’s current management team and employees, and to list CNOOC shares on the Toronto Stock Exchange.
© Copyright (c) Postmedia News
continue reading: http://www.montrealgazette.com/news/National/Nexen+takeover+raises+difficult+policy+questions/7343396/story.html
Please feel free to add feedback, additional info, alternative contact details, related links, articles, anonymous submission, etc. as a comment below, via web-form, through social media or mail us directly and confidentially at: dumpharper [at] live [dot] ca
This site may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in an effort to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. and intend its use to be for education and instructional purposes only. Therefore, we believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond “fair use,” you must obtain permission from the copyright owner.
ShareAlike Statement: https://dumpharper.wordpress.com/sharealike/