Ottawa Backs Sales of Oil Company Nexen To Chinese State Owned CNOOC

Canada's Oil Sands

In a move difficult to understand, Canada has sold the Oil company Nexen to the state owned Chinese firm, CNOOC, for $15.1 billion dollars.  Shareholders from Nexen approved the deal by an astounding 99% margin but it required the backing of Ottawa before the transaction could be finalized.  The sale is quite controversial because the feeling in Canada is it gives too much control of Canada’s oil industry to the Chinese.  It was assessed under the national security statutes and the sale “did not raise any concerns”.  Nexen owns a 7 percent stake in Alberta’s tar sands development through a subsidiary.  The Prime Minister of Canada Stephen Harper said, “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.” Harper continued, “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.”  In other words, following this transaction, the Canadian Government will no longer allow foreign states to buy up vital Canadian resources.  This sale should not have been permitted in the first place, but business is business I suppose. The sale of Nexen constitutes China’s largest foreign takeover.

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