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TORONTO and OTTAWA and CALGARY — Alberta issued a chilly response to Ottawa’s new foreign investment rules, with senior ministers concerned that investment in the oil sands will slow now that wealthy state-controlled energy firms are essentially off-limits for more takeovers in the province.
Alberta Energy Minister Ken Hughes said the new rules may reduce foreign investment and drive up the cost of capital for companies developing projects.
“There is the potential now for less investment going into the oil sands,” Mr. Hughes told a conference in Calgary. The minister said he worries that Alberta is already a high-cost jurisdiction for producing crude, and the possible increase in financing costs could reduce the competitiveness of the oil sands.
Share prices of Canadian energy companies were largely stable Monday, in the wake of the government’s late-Friday announcement that greatly restricts the ability of foreign state-owned enterprises to acquire Canadian energy firms. Indeed, chief executives from some of Canada’s largest energy companies applauded the federal government’s new policies, arguing that companies will find other ways to accomplish their financing and development needs.
On Monday, MEG Energy Corp., an oil sands development firm, said it agreed to raise $800-million from two share issues, including $400-million sold to the Caisse de dépôt et placement du Québec, an existing shareholder.
The financing is a sign that domestic investors remain willing to supply the funding Alberta needs. But it may have come at a price to MEG, whose shares dropped sharply early Monday in the wake of the government’s policy announcement and before the financing was announced, analysts said.
Doug Horner, Alberta’s Deputy Premier and Finance Minister, said the provincial Conservatives will wait for further clarification of the rules before deciding whether they support the federal government’s tough stance on government-owned energy companies from countries like China buying Canadian companies.
“We believe we need to have foreign investment coming from all sectors in order for us to fully realize the potential of our resources,” Mr. Horner told reporters on the sidelines of a conference in Toronto Monday. “Having said that, the federal government has made it clear the oil sands is an area where they believe control is going to be an issue for state-owned enterprise.”
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