CNOOC-Nexen Deal: NDP Calls For Consultations, Says Opinion 'Crystallizing' Against Takeover

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TONY CLEMENT NEXEN CNOOC
Treasury Board President Tony Clement stands in the House of Commons during Question Period on Parliament Hill, in Ottawa Monday February 13, 2012. .Clement says holding public consultations on the CNOOC takeover of Nexen, as the NDP has suggested, would be illegal. (THE CANADIAN PRESS/Fred Chartrand) | cp

UPDATE: Treasury Board President Tony Clement has rejected the NDP's call for public consultations on the takeover of Alberta energy company Nexen by state-owned Chinese oil giant CNOOC.

Basically they’re calling on the government of Canada to break the law,” Clement said, as quoted at Bloomberg news. “The law is very clear. Under the Investment Canada Act, there is a legal process that if you diverge from that process in any way, you are going to be subject to legal consequences.”

OTTAWA - Public opinion is "crystallizing" against the Nexen Inc. deal as concerns mount over the acquisition of a Canadian oil giant by a state-owned firm from communist China, the NDP says.

The party tabled a motion in the House of Commons on Tuesday asking the Harper government to speedily hold public hearings on the proposed takeover before it is too late.

The deal is currently under a 45-day review by Industry Canada that ends Oct. 12, but Ottawa could extend the deadline for reaching a decision by a further 30 days.

NDP critic Peter Julian noted that his party has been consulting with the public and stakeholders, saying he has personally made a trip to Calgary three times to solicit input.

"What we're seeing is a crystallization of public opinion against this deal," he said.

He added the $15.1 billion takeover by the China's CNOOC Ltd. has been the top issue even among his constituents in Burnaby-New Westminster, B.C., adding the oil patch is not normally a hot-button issue in his riding.

Julian said the NDP, which is the Official Opposition in Parliament, will issue it's opinion soon, almost certainly before the government is finished with its review.

Under the Investment Canada Act, the government will apply the "net benefit" test to determine whether to approve or reject the foreign takeover. But critics have argued the parameters are so flexible that the test often has to do with whether it will be of net benefit to the government.

And Julian said the government should institute a requirement for public hearings and a more transparent process because of the expectation that Canada's energy resources will increasingly become a target of foreign investors.

"Some people have talked about a tidal wave of other acquisitions and other takeovers ... and because the government has so badly botched this file, we are now in a much more difficult situation," he said.

In the House, Industry Minister Christian Paradis said the foreign investment act is evolving, noting that since 2007 the government added provisions for state-owned enterprises and for issues dealing with national security.

"This will be scrutinized carefully," he said.

After years of rubber-stamping takeovers, the Harper government intervened into two high-profile proposals, most recently the acquisition of Potash Corp. by an Anglo-Australian concern.

The prime minister has said that public opinion would play a role in the decision.

So far, public opinion polls have tended to show most Canadians have concerns. The most recent by Sun News-Abacus published two weeks ago suggested the opposition was increasing, with 69 per cent of respondents saying Ottawa should reject the deal. Even some Conservative MPs have voiced opposition.

Julian said Canadians have concerns about national security, the environment, as well whether jobs will be protected in his party's consultations.

Support has also been expressed, he said, particularly with the high price CNOOC is prepared to pay Nexen shareholders.

Aside from the economic merits of the specific case, supporters of the deal believe a rejection would have far-reaching consequences for Canada's global trade strategy aimed at closer economic ties with the world's second-largest economy.

A conference organized by the Canadian Council of Chief Executives last week emphasized the benefits of closer ties with Asia — and particularly China. Addressing the conference, both Finance Minister Jim Flaherty and Bank of Canada government Mark Carney urged Canadian firms to look to the East for new opportunities.

China expert Wenran Jian of the University of Alberta said rejection would have negative ramifications for Canada's relationship with China.

"We don't have to treat China as a friend,"he said. "But we should treat them as a business partner."

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