In an earlier post I had hoped that Canada’s approval of the CNOOC deal signalled a move towards a UK-style openness to investment by foreign entities and, particularly, foreign state-controlled investors. I was wrong. If anything, Canada may be more hostile to state-controlled investor deals than the US. Here are some excerpts from a Business Spectator commentary:
Canadian Prime Minister Stephen Harper said the CNOOC and Petronas deals would mark an end to state-owned foreign companies being treated the same as private foreign companies. In the future, takeover offers from state-owned foreign companies will face a higher threshold for approval compared with takeover offers from private companies.
“Canadians generally, and investors specifically, should understand that these decisions are not the beginning of a trend, but rather the end of a trend,” Harper said at a hastily-organised press conference. “When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments.”
Harper is trying to send a clear message to investors, that although Canada’s oil sands are in need of significant foreign capital, Canada will be picky in choosing where that capital comes from.
“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead,” he said. “The government’s concern and discomfort for some time has been that very quickly, a series of large-scale controlling transactions by foreign-owned companies could rapidly transform this [energy] industry from one that is essentially a free market to one that is effectively under control of a foreign government.”
Currently, Canada’s oil sands account for 60 per cent of the world’s oil production that is not under the control of national oil companies. As assets in other parts of the world are snapped up, Canada fully expects state-owned companies elsewhere to increasingly turn their attention to Canada.
“The government of Canada has determined that foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada,” he added.