In recent weeks, I have received thousands of letters and emails from Guelph and across the country who are concerned and opposed to both the proposed purchase of Nexen Inc.by the Chinese State Owned Enterprise (SOE) CNOOC Inc. and the Foreign Investment and Protection Agreement (FIPA) between Canada and China.
In a recent Angus-Reid poll, nearly 60 percent of Canadians stated that they wanted the Federal government to reject the proposed takeover of Nexen by CNOOC and nearly 80 percent stated that no foreign governments should be able to control resources on Canadian soil. Like those polled and those who have contacted me, I am of the same opinion.
Canada is a trading nation, with economic wealth, advanced infrastructure and vast potential – all of which make Canada a natural and attractive prospect for foreign investors. Generally speaking, the Liberal Party of Canada recognizes that foreign investments play a very important role in the Canadian economy. Foreign investors bring knowledge, capability, and technology and can increase the productivity, efficiency and competitiveness of Canadian firms. These investments frequently help Canadian based companies to expand and create new jobs in Canada and Canadians have benefited greatly from opening the country’s borders to trade and investment. While the vast majority of foreign investments in Canada are carried out in an open and transparent manner by private or public Corporations, there are instances when this is not the case. One of which, is the proposed purchase of Nexen, one of the largest Canadian oil and gas producing company with an estimated 2.3 billion barrels of proven oil reserves in Canada, and if approved, would make it CNOOC’s third acquisition of a Canadian oil and gas producing company.
Firstly, it is not about private foreign investment, but rather about investments in and control of our natural resources by another government. CNOOC is one of three major Chinese oil producing SOE’s who dominate energy production in China and have significant investments abroad, the other two being Sinopec and PetroChina, all of which already have significant investments in Canada through acquisitions, mergers and partnerships. Since 2009, Chinese SOEs alone have invested more than $10 billion in Canadian energy corporations and projects and the recent purchase offer by CNOOC of $15-billion of Nexen is more than twice what Nexen is estimated to be worth ($6.7 billion). As a free market country, Canadians and corporations have the right to operate businesses and access market based financing to operate and grow whereas China is not a free market country and financing is controlled by state banks. Chinese state banks provide their SOEs with cheap credit which explains why all three SOEs have paid far more for Alberta oil sands assets than their actual market value, especially with respect to the Nexen offer, placing priority on the state over pricing. Further, SOE bottom lines are subsidized by their own government creating an unfair competitive advantage over private companies who do not enjoy the same financial support. Government conditions attached to the deal are not likely to be complied with any more than conditions attached to recent private foreign takeovers of other Canadian companies like Stelco and Inco. Further, there are hundreds of billions of dollars accessible to other private foreign and domestic investors willing to invest in valuable Canadian resources and resource development so foreign government investment funds are hardly needed. Have we already forgotten Canadian companies who themselves are sitting on about a half trillion dollars of capital yet to be invested by them as a result of the Conservative Government’s most recent ill-advised cor