OTTAWA (Reuters) - Canada on Friday approved CNOOC Ltd’s landmark $15.1 billion bid for Nexen Inc, but said it would block virtually all new attempts by foreign state-owned enterprises to buy assets in the oil sands.
Separately, Canada approved a C$5.2 billion ($5.3 billion) bid by Malaysian firm Petronas for energy firm Progress Energy Corp. The federal Industry Ministry weighed both bids to see if they amounted to a net benefit to Canada.
The CNOOC bid was hugely controversial in Canada and raised rare open discord inside the ruling Conservative Party, where some legislators opposed the idea of foreign state-owned enterprises - particularly those from China - buying Canadian energy firms.
Prime Minister Stephen Harper said the two approvals announced on Friday marked the end of a trend for the right-of-center pro-business Conservatives.
“Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada,” he told reporters.
“Therefore, going forward, the minister (of industry) will find the acquisition of control of a Canadian oil sands business by a foreign state-owned enterprise to be of net benefit only in an exceptional circumstance.”
Ottawa introduced new rules imposing tough conditions on state-owned enterprises seeking to invest anywhere in the Canadian economy.
The strict new approach will raise questions about how Canada can raise the C$650 billion investment it says it needs in the natural resources sector in the next decade alone. Ministers say much of the money will have to come from abroad and China is an obvious source.
Harper said Canada was particularly concerned by two factors: the influence that foreign state-owned enterprises could have on Canadian industry and the influence that the country where the enterprise came from had over that enterprise.
In future, he said, state-owned enterprises seeking to invest in the economy would have to show adherence to free market principles and address the fact that they are susceptible to state influence.
Harper went to China in February to promote the idea of the Asian country buying Canadian oil and also made clear Canada was open for business.
But given the unhappiness in his own party, he took a tougher-than-expected approach.
“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead,” Harper said.
Reporting by David Ljunggren and Louise Egan; Editing by Randall Palmer, Frank McGurty and Leslie Adler