Canada won promises from China in backing Nexen deal -minister

Mon Dec 10, 2012 2:33am IST

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* CNOOC must report back to Canada government annually
    * Paradis: It's time to stop takeovers by state-owned firms

    By Russ Blinch
    TORONTO, Dec 9 (Reuters) - Canada wrested "significant"
commitments from China's CNOCC on issues of corporate governance
and transparency as part of its approval of the acquisition of a
swath of Canada's valuable oil sands reserves, Industry Minister
Christian Paradis said on Sunday.
    Defending the $15.1 billion takeover of Nexen, one of
Canada's largest independent oil companies, in the face of
grumbles from the left, Paradis said that Canada won
"significant undertakings" from CNOOC.
    Canada announced on Friday that, after months of study, it
would allow CNOOC's $15.1 billion acquisition of Nexen
Inc, a controversial ruling given concerns from some in
the ruling Conservative party about China's human rights record.
    Paradis said CNOOC made promises involving the management of
 Nexen and that the Chinese company would have report back to
the Industry Ministry to ensure conditions are being met.
     Canada made "sure that we had significant undertakings in
terms of governance, about transparency, about disclosure,"
Paradis told CTV's "Question Period" program.
    Paradis said he could not provide details for commercial
reasons.
    Under the deal, CNOOC will get full control of Nexen's Long
Lake oil sands project in northern Alberta, properties
containing as much as six billion barrels of recoverable crude
and a 7.2 percent stake in the Syncrude Canada Ltd
joint-venture.
     The ruling, closely watched by investors, followed months
of heated debate over how much of Canada's energy sector, and
especially its oil sands, should be absorbed by companies run by
other governments.
    Opposition leader Thomas Mulcair said the only clear winners
in the deal were oil company shareholders.
    "The only clear net benefit is to Nexen shareholders in Mr.
Harper's oil patch," Mulcair, leader of the New Democratic
Party, said in an interview on Global TV's "The West Block."  "I
think it has as much to do with that as anything else."
    The Nexen deal is the largest successful foreign takeover
ever by a Chinese company. Separately, Ottawa on Friday also
gave the green light for the purchase of Progress Energy
Resources Corp by Petronas of Malaysia. 
    Prime Minister Stephen Harper served notice, however, that
future investments by state-owned enterprises would face much
tighter scrutiny.
    Paradis reiterated Harper's statement that it was time to
"draw a line" against any further encroachment by foreign
state-run enterprises in the oil sands, which are the world's
third largest oil resource after those in Saudi Arabia and
Venezuela.
   Analysts said the Canadian government's announcement brought
some clarity to the market, which could help boost the already
strong Canadian dollar. 
    "It does show a willingness from Canada's government to
encourage foreign investment which speaks to a longer-term
interest into the Canadian dollar," said David Tulk, chief
Canada macro strategist at TD Securities.       
     The Harper government said it would still welcome
non-controlling minority investments by state-run enterprises in
Canadian companies, while insisting that the door remains open
to private-sector firms.
    Two years ago Canada had rejected BHP Billiton's $39 billion
bid for Potash Corp, on the grounds that it was not in Canada's
net interest.
   
  
    CNOOC will also acquire Nexen's 43 percent stake in the
Buzzard field in the North Sea, the most important contributor
to the crude blend used to set the Brent crude price that serves
as the international oil price benchmark.
    Nexen also has oil production from Yemen, offshore West
Africa and the Gulf of Mexico.
    Petronas offered C$5.2 billion ($5.3 billion) for Progress,
a mid-size gas producer.
    Nexen shares fell 6.3 percent to C$23.29 on the Toronto
Stock Exchange on Friday, before the announcement was made.   .
Nexen's New York-listed shares surged in after-hours trading.
Progress fell 88 Canadian cents, or 4.4 percent. to C$19.37.
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