'Patently unwise' for Canada to reject China money -ex-minister

Thu Nov 15, 2012 12:02am IST

Related Topics



* Prentice says investment by state firms won't subside

* Says Canada shouldn't worry about "ethnicity of money"

* Current CNOOC-Nexen decision deadline is Dec. 10

By Jeffrey Jones

CALGARY, Alberta, Nov 14 (Reuters) - Canada should not reject Chinese investments in its oil industry out of hand because China offers an important outlet as Canada seeks to broaden the market for its crude oil supplies, a former government minister said on Wednesday.

Jim Prentice, vice chairman for Canadian Imperial Bank of Commerce and a former member of Prime Minister Stephen Harper's cabinet, made his remarks as Ottawa reviewed the $15.1 billion takeover bid by China's state-owned CNOOC Ltd for Nexen Inc.

Prentice said Canada must remain open for business and realize that much foreign investment will be made by sovereign wealth funds and state-owned enterprises from both democratic and non-democratic countries.

The Harper government has intensified efforts to open up new markets for Canadian oil in China and throughout Asia to reduce reliance on the United States as its sole export market, in hopes of boosting returns for fast-growing oil sands production.

"In such an environment, saying 'no thanks' to the largest new market opportunity, namely China, would be patently unwise -- particularly in circumstances where the transactions do not imperil Canadian values or environmental and labor laws," Prentice said in notes for a speech to a major energy conference in London.

"One can fairly expect Prime Minister Harper to move with care and dexterity, balancing Canada's internal political concerns about foreign investment with the imperative to develop out its 'strategic partnership' with China and demonstrate progress on the need for reciprocity," he said.

Early this month, Ottawa extended its deadline for ruling on the takeover of Calgary-based Nexen by CNOOC to Dec. 10. The government is scrutinizing the contentious deal under guidelines for state-owned enterprises that Prentice drafted as minister of industry five years ago.

Canada blocked Malaysian state oil firm Petronas's C$5.2 billion ($5.2 billion) bid for Progress Energy Resources , a natural gas producer, on Oct. 20, but rather than completely ruling the deal out, it offered Petronas 30 days to make new representations to the government.

The government has pledged to release a clear set of guidelines for such transactions when it announces its decision on the takeover of Nexen.

Meanwhile, some Canadians, including a few members of Harper's government, have expressed concern over increasing control of the country's energy resources by China.

Prentice pointed out that most of the world's top 10 largest energy companies are state-owned and that most have investments in Canada, whose oil sands are the world's third-largest crude deposit.

He acknowledged such companies are different from other market players, as they "harness the power of both capitalism and the state," and therefore raise public policy questions.

As a result, Canada needs to make its criteria for allowing investments by state-owned enterprises clearer and insure that "undertakings" that investors agree to are enforced, he said.

Ottawa should not, however, concern itself with the "ethnicity of money" or try to force China and other countries to be more like Canada, Prentice said.

"The question must instead be whether the capital in question, once lodged in Canada, will adhere to market principles and to North American standards of governance and transparency," he said. "If so, then it should be welcomed. If not, then the investments should be scrutinized closely and potentially refused.

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

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 


Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 



Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage