TORONTO Natural Resources Minister Joe Oliver is suggesting the $15.1-billion takeover of Nexen by a Chinese state-owned company would not have gone through under new investment rules.
Oliver’s comments come on the heels of strict limits being placed on how much foreign state-owned influence is acceptable, particularly in the oilsands.
The federal government approved foreign takeovers Friday of Calgary-based Nexen Inc. and Progress Energy Resources Corp., but also updated the rules around such deals.
After a speech to the Canadian Association of Petroleum Producers today, Oliver said the Nexen takeover — under the new rules — “would have been difficult because it would had to have been an exceptional situation.”
The minister added that while Ottawa didn’t feel that the Nexen acquisition “was excessive,” he noted that new rules are “now in place.”
Oliver also said the rules won’t hurt the oilsands, as there is a “huge amount of capital available globally and quite a bit available inside our country.”
On Friday, Prime Minister Stephen Harper ended months of speculation by approving the foreign takeovers of Nexen Inc. by China National Offshore Oil Co., or CNOOC, and Progress Energy Resources Corp. by Malaysia’s Petronas.
In early trading Monday, Nexen shot up 14.17 per cent to $26.59 while Progress shares jumped 13.4 per cent to $21.96.
In future, all state-owned enterprises seeking to buy large Canadian companies will face greater scrutiny about how they operate and how much control their home governments would have over how they do business.
Shares in some Canadian oilsands producers found themselves the target of sellers Monday since they can no longer realistically hope to be snapped up by foreign state-owned enterprises at fat share price premiums.
For example, Meg Energy Corp. was down 86 cents to $33.86, but Athabasca Oil Corp. recovered most of an early loss, down a slight three cents to $10.22.
Oliver says the oilsands has “overwhelmingly” been advanced by the private sector and there is still “plenty” of investment money there.
He says the government is not denying future foreign state-owned investment in the oilsands, as they can still look at joint-venture opportunities in a minority position.
CNOOC launched a friendly $15.1-billion bid for Nexen and its Long Lake oilsands project in July, providing a series of guarantees to the Canadian government on job creation, head office location and corporate governance.
Industry Minister Christian Paradis said Friday he was satisfied that the deal would be a net benefit to Canada.
Oliver said Monday that the “net benefit” concept can’t be precisely defined.
“There has to be an element of flexibility in this,” he said. “We’ve come to the conclusion we can set out quite a number of rules, but you’ve got to leave some flexibility for the minister.
“People intuitively understand that the country has to be advantaged by the acquisition.”
Initially, Petronas’ $6-billion bid for Progress Energy, which is developing natural-gas lands in northeastern B.C., was rejected by the federal government and the company later revised its proposal.
The Canadian Press