Nexen deal China’s Canadian bridgehead – by David Olive (Toronto Star – July 24, 2012)

The Toronto Star, has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Stephen Harper won’t stand in the way of Beijing’s biggest-ever foreign investment, a $15.5-billion (U.S.) bid unveiled Monday for Calgary-based oil producer Nexen Inc. by China’s state-owned Cnooc Ltd., or China National Offshore Oil Corp. Indeed, the Canadian prime minister will be applauding.
If Athabasca is rivalled only by the Middle East in its vast oil reserves, the world’s top creditor nation has its own vast resources — of cash — that Harper is eager to tap. Chinese firms already have pumped $17 billion into North American oil and gas plays since 2010. But there’s at least another $2 trillion of acquisition firepower where that came from.

The Cnooc embrace also puts muscle into Harper’s warnings to Washington that Canada is ready to redirect its oil exports to Asia if the U.S. balks at, say, the proposed Keystone XL pipeline that Calgary’s TransCanada Corp. proposes to build across the length of the U.S.

U.S. President Barack Obama has crossed swords with Ottawa with his one-year moratorium on the Keystone XL megaproject. That delay prompted Harper to turn up the volume on his kind words for China.

Canada has long enjoyed friendlier relations with Beijing than has the U.S., a tradition dating from Norman Bethune and Pierre Trudeau’s rebuke to Washington in supporting China at the U.N.

But the current Ottawa-Beijing coziness is a remarkable twist for Harper, who came to 24 Sussex as a relentless critic of China’s record on human-rights abuses. Eventually, the economic interests of Harper’s home province dulled his principles on that topic.
Yes, Harper did block London-based BHP PLC’s hostile takeover bid for Saskatchewan-based Potash Corp. But Potash is an enterprise of global strategic importance, given its world dominance in potash, and the key role potash plays in world food supplies.
Nexen, by contrast, is a second-string player. A spinoff from U.S.-based Occidental Petroleum Corp., Nexen had no coherent strategy as a stand-alone firm.

For years it was known mostly for its Yemeni assets. The “country risk” of that neighbourhood — currently among al-Qaeda’s leading refuges — was long a drag on Nexen shares.

For the rest of this article, please go to the Toronto Star website:–nexen-deal-china-s-canadian-bridgehead-olive