Was Nexen Energy deal really a good idea for Canada or just PM Harper?

[Biz Liz]

My family has been in the oil and gas business for almost 80 years and neither my father nor uncles think the Nexen deal was a good one for Canada. They say if China was so desperate for oil they would have settled for 49% and Canada was dead erong to give controlling interest to the Chinese. Would we have made the same deal with the Russians? So why would take such a risk with China? This basically gave Canada's self-sufficiency a bullet to the head because in 20 years or so Canadian oil will be going to China and we'll be importing American oil! Canada should never be dependent on foreign countries - any foreign country for oil. We saw the bribery taking place with the Chinese on the lumber deal, and I wonder if the same may have influenced such a bad decision on the Nexen deal?

Edited October 8, 2015 by Biz Liz

[eyeball]

We'll know for sure if Harper ends up working as a consultant for Nexen or on a board of it's Directors

[Biz Liz]

LOL! Good point. But by then the damage will be done and then where does that leave us? I hope there is some way to legally reverse that deal - at least to give Canada the 51%?

[waldo]

no worries! Harper has provided assurance this was a one-time only purchase that gave ownership control to a foreign country...to, as one MLW member insists in labeling them, ... the "Red Chinese"! The smarter play now by the Chinese is/will be to keep those percentages under the Investment Canada review level!

[Topaz]

It wouldn't surprise me if some of the leaders are being paid by the corps. to get what they want, they only have to pay the price the leader wants.

[PIK]

Have a link to that claim topaz , or just shooting off your mouth again?

[G Huxley]

"no worries! Harper has provided assurance this was a one-time only purchase that gave ownership control to a foreign country..."

They also sold Talisman to the Spanish oil company Repsol.

Predictably not long after Nexen was sold to China there was a massive pipeline spill that inundated 16 square kilometers with oil.

Yeah great for Canada.

Edited October 9, 2015 by G Huxley

[nerve]

its just oil, its not like you can make money with that stuff anymore. Who cares

Come on its the Chinese, its like we are luring the Sheiks to come live with us...

can there be a better strategy to lure in the foreign nomenklatura/idle rich?

Edited October 9, 2015 by nerve

[Truth Or Dare]

Has he ever disclosed how many shares he actually owns or is that top secret too?

[cannuck]

"no worries! Harper has provided assurance this was a one-time only purchase that gave ownership control to a foreign country..."

They also sold Talisman to the Spanish oil company Repsol.

Predictably not long after Nexen was sold to China there was a massive pipeline spill that inundated 16 square kilometers with oil.

Yeah great for Canada.

Uh....are you for real?

Stephen Harper did not sell anything. Nexen sold itself to CNOOC, as did Talisman to Repsol. "Canada" didn't own either one. What Canada DOES own is all of the resources, and anyone taking them out of the ground will pay their royalties to Canada for the privilege. To GET those resources out of the ground, someone has to put their money up, take a HELL of a lot of risk, employ an awful lot of Canadians in the process. That is the oil business.

This post makes out as if Nexen was the be-all and end-all of the Canadian patch. They were merely one more company among hundreds - most remarkable for taking the plunge to try to tease oil out of the Athabasca Oil Sands. That - especially right now - is more like throwing a few billion into a great big hole in the ground and hoping like hell the thousands of people working there will be able to squeeze enough oil out of the sand to make a profit. - something very, very unlikely at $30odd oil. Also worth noting: Nexen/CNOOC not only extracts, they add value HERE by making synthetic crude.

The industry is global. Always has been. Take a look at who is in the Canadian patch and downstream, and you might notice that Exxon, Shell, Suncor and so on are FOREIGN companies, trading on the NYSE and TSE - exactly as is and does CNOOC (ltd.). Even the sort-of Canadian giants - Husky for one headquartered in Calgary - are owned in part by foreign entities. AND: you as a Canadian can buy as much of each of those companies as you would like

One post suggests we are going to run out of oil and have to buy it from China. Ahh...geez...that is just plain silly. The largest known deposit of hyrdocarbons in the world is the Athabasca Oil Sands (not by many technical standards conventional oil so seldom shows up) and 50% of the largest contiguous oil reservoir by surface area (the Bakken shales) are in Canada. If we REALLY tried hard, we might be able to put a dent in the Athabasca in another century or two, long after the rest of the world has run out of oil.

[RNG]

Uh....are you for real?

Stephen Harper did not sell anything. Nexen sold itself to CNOOC, as did Talisman to Repsol. "Canada" didn't own either one. What Canada DOES own is all of the resources, and anyone taking them out of the ground will pay their royalties to Canada for the privilege. To GET those resources out of the ground, someone has to put their money up, take a HELL of a lot of risk, employ an awful lot of Canadians in the process. That is the oil business.

This post makes out as if Nexen was the be-all and end-all of the Canadian patch. They were merely one more company among hundreds - most remarkable for taking the plunge to try to tease oil out of the Athabasca Oil Sands. That - especially right now - is more like throwing a few billion into a great big hole in the ground and hoping like hell the thousands of people working there will be able to squeeze enough oil out of the sand to make a profit. - something very, very unlikely at $30odd oil. Also worth noting: Nexen/CNOOC not only extracts, they add value HERE by making synthetic crude.

The industry is global. Always has been. Take a look at who is in the Canadian patch and downstream, and you might notice that Exxon, Shell, Suncor and so on are FOREIGN companies, trading on the NYSE and TSE - exactly as is and does CNOOC (ltd.). Even the sort-of Canadian giants - Husky for one headquartered in Calgary - are owned in part by foreign entities. AND: you as a Canadian can buy as much of each of those companies as you would like

One post suggests we are going to run out of oil and have to buy it from China. Ahh...geez...that is just plain silly. The largest known deposit of hyrdocarbons in the world is the Athabasca Oil Sands (not by many technical standards conventional oil so seldom shows up) and 50% of the largest contiguous oil reservoir by surface area (the Bakken shales) are in Canada. If we REALLY tried hard, we might be able to put a dent in the Athabasca in another century or two, long after the rest of the world has run out of oil.

Thank you for a well thought out and excellently presented post. The misconceptions and misinformation the media spews about the oil industry is a constant source of frustration for me.

[G Huxley]

Harper signed off on it. If he hadn't it couldn't have been sold.

[cannuck]

Harper signed off on it. If he hadn't it couldn't have been sold.

Harper signed off on it because the deal was done by business people who followed the rules of doing business within Canada. Hate to disturb your fantasy world, but it takes far more than one Prime Minister to do so. As it was, this changed the rules for foreign government controlled entities to have control of Canadian resources, but when CNOOC came to the table, it WAS within the rules. Harper and his cabinet did a fair job of walking and extremely fine line that could have had serious consequences to foreign direct investment in Canada had he slammed the door on someone who was doing was was entirely legal.

Besides, as I mentioned, Occidental/Nexen was not that big a part of the oil sands and the oil patch.

Oh: I should also mention that in the world of crude oil, the vast majority of ALL major players are government owned or controlled. Think of Sinopec, CNPC, CNOOC, Petronas, Aramco, Rosneft, NNPC, Shell (yes, ROYAL Dutch Shell). PDVSA, Pemex, INOC, NIOC, Neste, Statoil. Each of these have some presence in each other's oil patch both upstream and down. It is part of being a global citizen vs. the concept of being a shivering, isolationist, protectionist coward hiding in a corner.

Edited December 28, 2015 by cannuck

[waldo]

had he slammed the door on someone who was doing was was entirely legal.

it was never a question of legality. Per the existing Investment Canada Act guidelines, Harper and/or the applicable minister needed to sanction the sale... to allow a foreign Chinese government controlled company to own controlling interest in a Canadian company. What fine line are you speaking about when the rules/thresholds are tightened up... AFTER the approval was granted. Fine line - huh! Apparently, under the old rules/thresholds, the sale was a "gain for Canada"... under the new rules/thresholds, the sale wouldn't have been valued as a "gain" and wouldn't be allowed! Fine line - huh!

[Argus]

Harper signed off on it. If he hadn't it couldn't have been sold.

It was a necessary sacrifice to appease the Chinese at a time we needed foreign investment in Canada. Had we refused they would have taken umbrage and there would have been economic sanctions.

[waldo]

It was a necessary sacrifice to appease the Chinese at a time we needed foreign investment in Canada. Had we refused they would have taken umbrage and there would have been economic sanctions.

so... closing the "same door... at that same threshold level" on China (and other foreign companies) after the Nexen sale... umbrage taken AFTER the Investment Canada Act rules/thresholds changed? I've just read of 2 subsequent (smaller) investments made by China since the Nexen purchase... 2013 purchase of Novus Energy by Yanchang Petroleum for $232 million & 2014 purchase of Baccalieu Energy by the China Oil and Gas Group for $236 million. Now sure, China has pulled back from Northern Gateway involvement... but that's a whole different discussion on China's view of Canada's regulatory approval process.

[bush_cheney2004]

What's the big deal ? About 70% of Canadian oil production is foreign owned. Canada lacks the domestic capital to make the oil patch happen...been that way for decades.

Edited December 28, 2015 by bush_cheney2004

[Argus]

What's the big deal ? About 70% of Canadian oil production is foreign owned. Canada lacks the domestic capital to make the oil patch happen...been that way for decades.

It's one thing to have it in the control of foreign owned companies, and quite another to be in the control of foreign governments, especially non-democratic governments.

[cannuck]

It's one thing to have it in the control of foreign owned companies, and quite another to be in the control of foreign governments, especially non-democratic governments.

I can sympathize with your sentiments, but reality is that China is still very much a Marxist Communist country. Yes, there is a HUGE private economy, but much of the key core industries is still state owned. The way to change that is to deal with them, not slam the door in their face. Just to give you an example: my closest friend in China was a very senior exec with one of the big Chinese state owned engineering firms. Drank the cool-aid every day. He got into an overseas post and opened their Damam office, started to see things differently (and note that even the Saudis let them invest and own stuff). When he went back to China, he left them for GE, and as of this year, he has almost completed the process to emmigrate to Canada and open his own business. Just scale that up to 1.7 billion.

Besides, as I said, Nexen is not that big a deal in the oil sands or patch. If it buys some good diplomatic mileage for us, it was well worth it (and I can tell you from what I have seen - it did).

[bush_cheney2004]

Statoil, with large oil sands and offshore projects in Canada, is majority owned by the government of Norway.

[G Huxley]

"It was a necessary sacrifice to appease the Chinese at a time we needed foreign investment in Canada. Had we refused they would have taken umbrage and there would have been economic sanctions."

Surrendering to Chinese govt bullying. Yeah really impressive.

Edited January 1, 2016 by G Huxley