Feelings are so brittle and tensions are so high within Canada these days over where to draw the line on control of the country’s natural resources by state-owned Asian companies that the snapping point is reached with only the slightest provocation.
The mood was captured Oct. 5 when Canadian natural gas producer Progress Energy Resources disclosed that the Canadian government has delayed until Oct. 19 a decision on whether Malaysia’s Petronas can go ahead with its C$5.5 billion takeover of Progress.
Although the government declined to explain its reason, the word from Progress was immediately linked to the high-profile battle over CNOOC’s planned US$15.1 billion acquisition of Nexen.
Progress, which had hoped to obtain all the final shareholder, court and government approvals to complete the transaction by Sept. 25, indicated it was not especially bothered by the failure to meet that target.
Greg Kist, vice president of government relations with Progress, said the revised timetable is “not inconsistent with transactions of this nature.”
He said the company had nothing further to say, although CEO Michael Culbert has said recently that optimism the deal will go through has already yielded benefits for Progress, which expects over the next year to triple the eight rigs it is currently running in British Columbia.
Coincidence?
Coincidence or not, completion of the federal investment review of the Petronas-Progress transaction is now scheduled to come a week after the initial deadline of a ruling on the CNOOC-Nexen deal.
In a rare hint of his own unease, Harper, a strong advocate of foreign investment to help fund C$630 billion of anticipated capital spending in Canada’s petroleum industry over the next decade, conceded in Parliament Oct. 4 that the CNOOC-Nexen review “raises a range of difficult policy decisions, difficult forward-looking issues.”
He said those issues will “all be taken into account under the (Investment Canada) Act in assessing the net benefit of this investment to this country before we take a decision.”
Also in Parliament, Industry Minister Christian Paradis accused the New Democratic Party, the chief political opposition to Harper’s Conservatives, of trying to “frighten off investment and shut down trade” after the NDP announced Oct. 4 that it was formally opposed to the deal.
“The NDP’s actions are reckless and irresponsible,” he said. “By attempting to politicize the review progress they are creating the kind of uncertainty that scares off the investment Canadian companies rely on to create jobs, innovate and compete.”
No ‘rubber-stamping’
Peter Julian, energy spokesman for the NDP, told a news conference Oct. 4 his party will not “support rubber-stamping the CNOOC takeover of Nexen” until the government discloses what is needed to pass the “net benefit” test.
He said the NDP concerns include the environmental and human rights record of CNOOC, the potential for job losses and the risk to national security of CNOOC gaining access to oil sands technology and strategies.
Petronas launched its bid for Progress on June 28 and raised its offer in July to C$22 a share from the initial C$20.45 a share, or 90 percent above the closing price on June 27.
So far, Progress has received approval from its shareholders, a court in Alberta and a letter from the federal government’s Commissioner of Competition confirming that no remedial action was required, leaving the final decision with Paradis.
Petronas and Progress formed a joint venture in 2011 to develop three shared gas fields in northeastern British Columbia’s Montney play and study the feasibility of using the gas to support an LNG export project.
The two companies have targeted a final investment decision in 2014 on an LNG operation, aiming to start exports to Asia by late 2017 or early 2018.
Minority stakes secured
Over the past eight years, a several state-owned Asian firms in China, Japan, South Korea, Thailand and Malaysia have secured minority stakes in Western Canada’s oil sands and shale gas plays, moving progressively closer to outright ownership.
The next in line could be Athabasca Oil Corp., whose CEO Sveinung Svarte said Oct. 4 that two joint ventures with international partners — one widely believed to be Kuwait Petroleum — need only “certain approvals” before details are announced within a month or so.
Athabasca has regulatory approval for its 12,000 barrels per day Hangingstone oil sands project that is targeted for eventual output of 82,000 bpd, while an application is schedule for filing in 2013 for its Birch project, designed for an initial 35,000 bpd, possibly expanding to 155,000 bpd.
Although Athabasca has no current production, it is hoping to reach about 11,000 boe per day from its conventional properties by the end of 2012.
