BUSINESS

Justin Trudeau Endorses CNOOC Nexen Takeover

11/20/2012 09:49 EST | Updated 11/20/2012 12:17 EST
CP

Liberal Party leadership contender Justin Trudeau has come out in favour of the proposed takeover of Nexen by Chinese state-owned oil company CNOOC.

In an editorial that appeared at some Postmedia newspapers Tuesday, Trudeau cast the controversial deal as a way to help Canada’s middle class by building new trade relationships for the 21st century.

“Canada’s economic prospects have always been tied to trade,” he wrote. “We are a small market that must export and attract investment to create jobs and growth, and import to keep costs down and provide choice for middle-class families.”

Trudeau’s endorsement came amid a Bloomberg news service report that CNOOC has accepted a number of conditions Canada has set out for approval of the $15.1-billion takeover deal.

According to Bloomberg, the Chinese oil company has accepted demands laid out by Canadian negotiators that at least 50 per cent of the positions on Nexen’s management board be held by Canadians.

In his editorial, Trudeau argued that the deal is important for the opportunities it creates for Canadian exporters in China.

“Chinese and other foreign investors will create middle-class Canadian jobs. Foreign investment raises productivity, and hence the living standards of Canadian families. More fundamentally, it is in Canada’s interest to broaden and deepen our relationship with the world’s second-largest economy,” he wrote.

The proposed takeover of Nexen has proven controversial, with a majority of Canadians saying in polls they oppose selling Canadian natural resource assets to state-owned foreign companies.

CSIS, Canada’s intelligence agency, has raised concerns about state-owned companies in the oil patch, as have members of the U.S. Congress, who point out that CNOOC is involved in a major offshore natural gas project in Iran and has referred to its assets as a “strategic weapon."

CNOOC is able to invest in the Iranian gas field because China is among 10 countries that have received a waiver exempting them from strict sanctions imposed on Iran.

“In certain sectors, national security concerns will be real. However, in the CNOOC case, Chinese ownership of three per cent of oilsands leases hardly constitutes a national security issue,” Trudeau wrote.

Trudeau also indicated in the editorial that he doesn’t support the construction of Enbridge’s Northern Gateway pipeline from Alberta to the British Columbia coast.

Because political leaders haven’t put forward a coherent vision for Canada’s energy sector, “it is ... as difficult to reject bad ideas like the Northern Gateway as it is to approve good opportunities like the CNOOC and Petronas deals,” Trudeau wrote.

The federal government has delayed its decision on the CNOOC-Nexen takeover to early next month. The recent rejection of Malaysian state-owned oil company Petronas’ bid for Progress Energy has made some observers concerned that Canada is taking a protectionist attitude towards foreign investment in the energy industry.

But recent comments from Harper government politicians about the takeover have been positive, suggesting the government may be leaning towards approving the deal.

The NDP has come out against the takeover, saying that it can't support the deal because of the secretive way the Harper government is overseeing it.

Also on HuffPost

Canada's 10 Most Valuable Energy Brands
10 Facts About Canada's Oil Industry