Considering the next Nexen – by Conrad Black (National Post – December 15, 2012)

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The federal government’s new guidelines on foreign acquisitions of Canadian companies are commendable, as far as they go. They require investment reciprocity on the part of the nation of the company seeking to acquire Canadian assets, and mandate special scrutiny in cases involving our natural resources — especially the oil sands.

Stephen Harper was accurate in saying that it was not sensible to have privatized PetroCanada, while indulging unlimited acquisitions of other petroleum assets in this country by interests controlled by foreign governments.

On the other hand, the strategic value of our oil sands might not prove to be as significant as some expect. New oil and gas technologies already have served to reduced U.S. oil imports from 60% to 45% of that country’s requirements. And that trend now seems likely to continue until the U.S. retrieves its status of energy self-sufficiency that started to slip away in the Eisenhower era.

This cannot fail to reduce international oil prices, which may slip back down to $50 a barrel. Given this, sales of oil sands assets and companies at prices tied to current oil prices look advantageous to the seller. This appears to have been the case with the Nexen acquisition, just approved by the federal government.

Moreover, given that when the oils sands are included, Canada has oil reserves as great as Saudi Arabia’s, the wholesale sell-off of the country’s oil heritage is an extremely remote prospect. Even if arrangements approved now become strategically disadvantageous later, they can be reversed, and any asset in this country can be taken back by Canada.

Certainly, Canada would never follow the example of Cuba, and seize foreign assets without compensation. But there is no reason why it could not follow the example of Mexico in the 1930s and take over oil or other natural resources assets owned by foreign interests for what would then be considered reasonable compensation. This is what Quebec did with much of its hydro-electric industry, in stages, under premiers Duplessis, Godbout and Lesage, in 1937, 1944 and 1962.

Ottawa should not be in the business of choosing industrial winners, or likely fluctuations in the value of natural resources and raw materials. But only the government of Canada has the right and duty to determine and pursue the national interest.

What is required in this, as in so many other policy areas, is some original thinking; and, in ideological terms, a middle ground between the often over-defended traditional positions of both rampant free marketeers and knee-jerk socialists.

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