* Canadian PM says CNOOC bid raises difficult issues
* Canada NDP says it fears “tidal wave” of foreign bids
* Government deciding whether to approve CNOOC bid for Nexen
* NDP cites lack of transparency in approval process
* Canada PM says U.S. pressure won’t influence decision
By David Ljunggren and Randall Palmer
OTTAWA, Oct 4 (Reuters) – Canada said on Thursday that a
$15.1 billion Chinese bid for domestic oil company Nexen Inc
raised difficult policy questions, but the government
gave no sign it would bow to an opposition demand to veto the
deal.
Speaking hours after the main opposition party demanded a
veto on CNOOC Ltd’s bid, Prime Minister Stephen Harper
said the government would look at a range of issues in
determining whether the deal, the largest foreign takeover ever
launched by a Chinese firm, would be of net benefit to Canada.
The deal has also raised rare public signs of unrest among
Conservative legislators, some of whom fret about the idea of a
Chinese state-owned enterprise buying Canadian energy assets.
“This particular transaction raises a range of difficult
policy questions, difficult and forward-looking issues. Those
things will all be taken into account,” Harper told reporters in
Ottawa, when asked about the bid.
Fund managers and market analysts say they expect Ottawa to
approve the deal, though not without conditions.
These could include seeking guarantees on employment and
investment, requiring that CNOOC promise to follow Canadian laws
and practices and demanding that a certain number of Canadians
be appointed to the board of directors.
“Our position has been to be generally welcoming of foreign
investment, but at the same time as you know we have approved
many transactions, we have significantly modified some, and we
have blocked some transactions,” said Harper.
Canada, a leading energy exporter, has the world’s
third-largest proven oil reserves, most of them in the western
province of Alberta.
The government is trying to balance concerns over the CNOOC
bid with a huge need for foreign energy investment. Ottawa says
C$630 billion ($643 billion) in investment is needed over the
next decade alone, with much of it to come from overseas.
The Conservatives last blocked a deal in November 2010 when
they shocked financial markets by preventing BHP Billiton Ltd
from buying fertilizer maker Potash Corp,
which is based in the western province of Saskatchewan.
Fund managers and arbitragers say the memory of the Potash
deal – which foundered over opposition from the Saskatchewan
government and federal Conservative legislators from the
province – means there remains an element of doubt over Nexen.
CNOOC officials could not be reached for comment after Prime
Minister Harper’s remarks. China is celebrating its Golden Week
of public holidays this week.
However, a source familiar with recent talks between CNOOC
and Canadian politicians said Harper had said nothing new and
that the deal was still expected to get approved with
conditions.
“This is nothing new. This didn’t break any new ground,” the
source said, noting that conditions were to be expected.
CANADA OPPOSITION AGAINST DEAL
Nexen shareholders have already voted overwhelmingly to
accept the bid and the Alberta government is in favor.
Harper says Ottawa will take public opinion into account
before making a decision. Polls have shown most Canadians oppose
China buying Nexen.
Asked about speculation the United States was putting
pressure on Canada to scrap the deal, Harper replied: “The
government of Canada will take its own decision irrespective of
what the government of the United States does. We don’t
obviously follow their judgments in these matters.”
CNOOC said on Sept. 5 that it had asked the U.S. government
to review its bid for any national security concerns. About 10
percent of Nexen assets are in the U.S.
A handful of U.S. lawmakers have asked Treasury Secretary
Timothy Geithner to review the deal with one urging Washington
to block the deal in order to extract trade and investment
concessions from the Chinese government. The U.S. has the power
to require Nexen to divest its U.S. holdings, or impose other
conditions in the event of a CNOOC acquisition.
Canada’s main opposition party, the center-left New
Democrats (NDP), demanded Harper block the bid, saying approval
of the deal could trigger “a tidal wave” of foreign takeovers.
The NDP has no power to prevent the deal, but the party’s
comments reflect the political sensitivity of the affair.
NDP natural resources spokesman Peter Julian said criteria
for determining “net benefit” – a rule that must be met for a
foreign takeover to go ahead – was far too vague and excluded
questions about jobs, human rights, national security and the
environment.
Julian wants the government to hold public hearings on the
bid. He cited what he said was the risk of “a number of other
takeover deals that are pending. Some people have said it’s a
tidal wave of takeovers that are coming down the pike”.
Industry Minister Christian Paradis, ultimately responsible
for deciding whether to approve the CNOOC bid, said the NDP’s
actions were reckless and irresponsible.
