Chinese baffled by government concerns over Nexen
Dean of economics at the China Petroleum University says it is unclear how the Harper government is weighing the deal.
EDMONTON—Chinese government officials and business people don’t know what rules Canada is using to evaluate the proposed takeover oil sands producer Nexen by the state-owned China National Offshore Oil Corporation, says a top oil expert from Beijing.
Regardless of the result, Chinese interest in Canadian resource companies is unlikely to fade, according to Lianyong Feng, dean of economics at the China Petroleum University and a former executive with the China National Petroleum Corp.
“Success or fail, I think it will have no impact on Chinese companies in the future to do business with Canadian oil sands,” Feng said.
Feng was at Grant MacEwan University in Edmonton to speak at a conference on the oil sands. After his presentation, he discussed the controversial $15.1-billion Nexen deal and the scrutiny it has provoked in an interview with The Canadian Press.
He said Chinese understand that political decision-making takes longer in Canada.
“In Canada, there are more stakeholders,” he said with the occasional help of a translator. “Central governments and local people have different opinions and different interests.
“I understand the difficulty to make decisions in Canada. You have to wait the time.”
What they don’t understand is what the Canadian government is looking for as it decides whether or not the Nexen deal can proceed.
“They don’t know very well how (Canadians) evaluate the business deal. Maybe it is a problem but I think we can understand it in the future.”
Calgary-based Nexen, which produces oil and gas, would be China’s largest foreign takeover to date. Nexen expects the deal to close by the end of the year.
The federal NDP have objected to it, citing national security, environmental and human rights concerns. Canada’s spy agency raised a red flag on foreign investment by state-owned firms in its annual report earlier this year.
The Harper Tories are studying whether the deal represents a “net benefit” to Canada.
But NDP natural resources critic Peter Julian says there aren’t clear guidelines on what constitutes a net benefit.
The government recently blocked a potential takeover of Calgary-based Progress Energy Resources by the Malaysian state-owned company Petronas, ruling it failed to pass that test. Executives from both companies are meeting with Industry Canada officials to try to figure out what the government wants in an effort to salvage the $6-billion deal.
Earlier this week, Natural Resources Minister Joe Oliver acknowledged that public opinion plays a role in the decision-making, and a poll released Wednesday suggested it doesn’t favour the CNOOC takeover.
The University of Alberta’s China Institute found 37 per cent of respondents believe partial Chinese ownership in Alberta resources is acceptable, 36 per cent oppose it and 27 per cent are undecided.
The same survey asked about full Chinese ownership and just 15 per cent of respondents found it acceptable, with 64 per cent against.
Feng proposed Canada and China set up a group to work out the conditions under which Chinese companies could acquire and operate Canadian resource assets.
“This association would have benefits for both sides,” he said. “(It) can find best practices and regulatory standards for companies.”
It can also create more transparency in Chinese-Canadian resource deals, he said.
Ultimately, Feng said he expects the Nexen deal to go through.
“I think the deal with Nexen has a good future.”