Canada's Oliver says new rules won't slow oil sands growth

Mon Dec 10, 2012 2:07pm EST

* Plenty of private capital available, energy minister says

* Says China accounts for under 10 pct of oil sands output

TORONTO Dec 10 (Reuters) - New rules limiting Canadian oil sands investments by foreign state-owned companies are unlikely to hinder rising oil production from the region, Joe Oliver, the minister of natural resources, said on Monday.

Oliver, speaking to reporters following a speech to an oil and gas investment conference, said Prime Minister Stephen Harper's decision to limit investment by state-owned companies in the world's third-largest crude reserves would not restrict capital available for the investment-hungry oil sands sector.

"There is a huge amount of capital available globally and quite a bit available inside the country," he said. "In fact the oil sands have been financed overwhelmingly by the private sector.

"Foreign state-owned enterprises represented, I believe, last year about 11 percent of acquisitions globally. ... We believe there's plenty of private sector money."

Harper introduced the restrictions on Friday, as Canada approved the $15.1 billion purchase of Nexen Inc by China's CNOOC Ltd -- China's biggest-ever overseas acquisition -- and the C$5.2 billion ($5.3 billion) takeover of Progress Energy Resources Corp by Petronas, Malaysia's state oil company.

While CNOOC will gain full control of Nexen's six-billion barrel oil sands resource, state-owned investors in the future will be limited to minority stakes in oil sands projects unless there are exceptional circumstances.

Oliver said the new rules were issued to assuage concern that state-owned enterprises would operate on strategic, rather than commercial terms.

Such companies "may have broader objectives if the state decides to impose its political objectives on the operation of the state-owned enterprise," Oliver said. "Then there is an issue and that's precisely what is potentially of concern."

However, he added that even after the Nexen acquisition is complete, China's state-owned and controlled oil companies will hold less than 10 percent of production from Alberta's tar sands, the world's third-largest crude reserve and the single largest source of U.S. oil imports.

"The percentage of Chinese-owned investment in the oil sands in terms of future production will still be under 10 percent," Oliver said. "So we didn't feel with the acquisition the number was excessive, but new rules are now in place."

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.