OTTAWA - The New Democrats are calling on the federal government to reveal what criteria it's using to decide whether to allow a state-owned Chinese company to buy a Canadian oil-and-gas producer.
Ottawa kicked off its review of China National Offshore Oil Co.'s $15.1-billion deal to buy Calgary-based Nexen Inc. (TSX:NXY) on Wednesday.
In reviewing foreign takeovers, the minister must decide whether the deal would be of net benefit to Canada, but the Tories haven't defined what that means.
On Thursday, a junior cabinet minister mused that protecting the environment would be part of the review process. Last week, the prime minister suggested public opinion could also be a factor.
But the New Democrats say the government needs to put forward a far more detailed definition because the public and industry need to know.
"We don't have clear rules, we don't have a clear process, we don't have a transparent process. The public has lost confidence," said NDP MP Peter Julian.
"And on the other hand, I think investors really question will this takeover blow up ... or is it subject to clear rules and a thorough review process that everybody can trust."
The review will take 45 days initially, but can be extended by 30 days or more.
Conservative Minister of State for Finance Ted Menzies offered some explanation of net benefit Thursday.
"Net benefit makes sure that our resource sector will be well looked after," Menzies said in a teleconference call from Moscow where he's attending meetings ahead of the APEC summit.
"To me, that's net benefit — to make sure that it's treated in the same way as our Canadian companies.
"Indeed, many of the companies that are operating in the oil and gas sector right now are not Canadian companies so we make sure that they treat the environment with respect, make sure that they do due diligence and look after our environment as they're doing it," he said.
A poll released last week by the Sun News Network suggested the majority of Canadians aren't in favour of the deal.
When asked about it during his Northern tour, the prime minister said public opinion could also factor into his government's decision on whether to sign-off.
"Our government will take the time we have to properly scrutinize this transaction and to assess that, if it is to go ahead, that it will only go ahead if it is in the best long-term interest of the Canadian economy,'' Stephen Harper said.
Julian said other factors, like job creation, research and development and environmental protection must be taken into account.
The nationality of the buyer could be a factor as well, Julian said.
"It depends on the impact of that test of net benefit," he said.
"If you have established criteria that allow for a level playing field, I think the decision becomes self-evident — but we don't have that criteria."
Julian wouldn't say whether the NDP had any objections to a Chinese state-owned firm becoming a major player in the oil-and-gas sector.
He said the NDP doesn't have a formal position on the deal itself and is seeking to consult with Canadians.
Industry Minister Christian Paradis, who is leading the review, said the government is consulting as well.
"The review process under the (Investment Canada Act)is rigorous, involving consultations with affected provinces/territories and other government departments," he said in a statement.
"I will take the time required to carefully examine CNOOC’s proposed acquisition of Nexen Inc. and determine whether it is likely to be of net benefit to Canada."
In announcing the friendly deal on July 23, the Chinese state-owned company vowed to make Calgary the headquarters of its North and Central American operations and to keep all of Nexen's employees and management.
The agreement came after more than two months of negotiations between Nexen and CNOOC executives. Nexen twice rejected CNOOC's bid as too low before ultimately embracing the offer.
If successful, the deal would be China's largest-ever overseas acquisition.
The Conservatives have rejected only two foreign takeovers in the last six years, most recently a US$40-billion bid by Anglo-Australian mining firm BHP Billiton for Potash Corp. (TSX:POT) in 2010.
Following the rejection of the bid, the federal government said it would clear up the rules regarding foreign investment.
But this spring, Paradis announced only modest changes that didn't that didn't touch on the issue of net benefit.
Earlier on HuffPost:
10. Oil And Gas Accounts For 4.8 Per Cent Of GDP
The oil and gas industries accounted for around $65 billion of economic activity in Canada annually in recent years, or slightly less than 5 per cent of GDP. Source: <a href="http://www.ceri.ca/docs/2010-10-05CERIOilandGasReport.pdf" target="_hplink">Canada Energy Research Institute</a>
9. Oil Exports Have Grown Tenfold Since 1980
Canada exported some 12,000 cubic metres of oil per day in 1980. By 2010, that number had grown to 112,000 cubic metres daily. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=9&SheetID=224" target="_hplink">Canadian Association of Petroleum Producers</a>
8. Refining Didn't Grow At All As Exports Boomed
Canada refined 300,000 cubic metres daily in 1980; in 2010, that number was slightly down, to 291,000, even though exports of oil had grown tenfold in that time. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=7&SheetID=104" target="_hplink">Canadian Association of Petroleum Producers</a>
7. 97 Per Cent Of Oil Exports Go To The U.S.
Despite talk by the federal government that it wants to open Asian markets to Canadian oil, the vast majority of exports still go to the United States -- 97 per cent as of 2009. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
6. Canada Has World's 2nd-Largest Proven Oil Reserves
Canada's proven reserves of 175 billion barrels of oil -- the vast majority of it trapped in the oil sands -- is the second-largest oil stash in the world, after Saudi Arabia's 267 billion. Source: <a href="http://www.ogj.com/index.html" target="_hplink">Oil & Gas Journal</a>
5. Two-Thirds Of Oil Sands Bitumen Goes To U.S.
One-third of Canada's oil sands bitumen stays in the country, and is refined into gasoline, heating oil and diesel. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
4. Alberta Is Two-Thirds Of The Industry
Despite its reputation as the undisputed centre of Canada's oil industry, Alberta accounts for only two-thirds of energy production. British Columbia and Saskatchewan are the second and third-largest producers. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
3. Alberta Will Reap $1.2 Trillion From Oil Sands
Alberta' government <a href="http://www.huffingtonpost.ca/2012/03/27/alberta-oil-sands-royalties-ceri_n_1382640.html" target="_hplink">will reap $1.2 trillion in royalties from the oil sands over the next 35 years</a>, according to the Canadian Energy Research Institute.
2. Canadian Oil Consumption Has Stayed Flat
Thanks to improvements in energy efficiency, and a weakening of the country's manufacturing base, oil consumption in Canada has had virtually no net change in 30 years. Consumption went from 287,000 cubic metres daily in 1980 to 260,000 cubic metres daily in 2010. Source: Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=6&SheetID=99" target="_hplink">Canadian Association of Petroleum Producers</a>
1. 250,000 Jobs.. Plus Many More?
The National Energy Board says oil and gas employs 257,000 people in Canada, not including gas station employees. And the Canadian Association of Petroleum Producers says the oil sands alone <a href="http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/OilsandsaCanadianjobcreator.aspx" target="_hplink">will grow from 75,000 jobs to 905,000 jobs by 2035</a> -- assuming, of course, the price of oil holds up.