OTTAWA - A U.S. congressional panel's scathing criticism of China technology firms should give the Harper government cause to reject the proposed Chinese takeover of Alberta oil company Nexen, the opposition NDP said Tuesday.
Industry Canada could announce as early as this week the result of its review of the $15.1-billion bid by the state-owned China National Offshore Oil Co. for Calgary-based Nexen Inc. (TSX:NXY).
The NDP opposes the CNOOC takeover because it says ceding control of the large Canadian resource company to a state-owned Chinese interest raises national security concerns, among others.
The party's foreign affairs and natural resources critics, Paul Dewar and Peter Julian, pointed to Monday's warning by the U.S. House Intelligence Committee that the States should avoid doing business with Huawei Technologies Ltd. and ZTE Corp.
The committee revived long-standing criticism that the companies are linked to Chinese intelligence, which could use their products for cyber-espionage — a charge both the companies and the Chinese government loudly denied Tuesday.
Dewar said the U.S. warning in the telecom case helps make the case for the Harper government to nix the Nexen energy deal.
"This isn't about selling wheat," Dewar said in an interview Tuesday.
"Look at the two strategic interests we have in our country: natural resources and telecommunications. The two issues we're dealing with right now are both of those," he added.
"Any of these business arrangements should be dealt with, with an abundance of caution."
Julian criticized the government for weighing the Nexen takeover behind closed doors, without adequately explaining how it will balance the "net benefit" of the deal with the national security risks of allowing CNOOC a controlling interest in the oilsands.
Monday's U.S. report came after the matter was considered during months of public hearings by the House committee, Julian noted.
"I think what this is, is a very strong wake-up call to this government to get its act together," said Julian.
"It certainly will have an impact on public opinion."
Prime Minister Stephen Harper indicated last week that his government is grappling with a range of difficult policy questions on whether to approve the Nexen deal.
The government has until this Friday, but could extend the review period another 30 days.
Monday's U.S. report urged companies to avoid doing business with Huawei and ZTE and said regulators should prevent them from buying U.S. companies. It also said government computer systems should not include components from them because they might pose an espionage risk.
The report has implications for Canada because Huawei is partnered with Bell Canada and Telus.
Huawei could also be in the running to help build the government's new secure telecommunications system.
A spokesman for Shared Services Canada said Tuesday night he could not comment "on any particular equipment supplier."
"In order to protect its national security interest, the Government of Canada has in fact invoked the National Security Exception under Canada's domestic and international trade agreements in connection with the procurement of consolidated email, telecommunications and data centre infrastructure, systems and services," spokesman Ted Frances said in an email.
Huawei Canada employs 400 people in Ontario, including 280 people at a facility in Markham, near Toronto.
Ontario Premier Dalton McGuinty said he wasn't concerned by the criticism raised in the U.S., adding that it's up to the federal government to deal with international security questions.
"At some point in time if authorities within the federal government believe that they have real concerns, then I expect that they will raise those with us," McGuinty said Tuesday.
"I have a lot of confidence in our police authorities and a lot of confidence in Canadian authorities generally when it comes to providing us with advice on that front."
China's government rejected the U.S. report as false and an effort to block Chinese companies from the American market.
"The Chinese side expresses its serious concerns and strong opposition," commerce ministry spokesman Shen Danyang said in a statement Tuesday. He called on the United States to "abandon the practice of discrimination against Chinese companies."
Huawei and ZTE, both based in Shenzhen in southern China, near Hong Kong, rejected the accusation and complained that the committee failed to provide evidence to back it up.
The report "employs many rumours and speculations to prove non-existent accusations,'' a Huawei spokesman, Scott Sykes, said in an email.
— with files from The Associated Press
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.