# Chinese and Malaysian takeover of two oil sand companies



## carverman (Nov 8, 2010)

The Harper gov't approved the takeover bid (15.x billion) of Nexen to CNOOC.



> Harper said* foreign-state control of oilsands development in particular has reached the point where further control would not be beneficial to Canada.*
> 
> "When we say that Canada is open for business, *we do not mean that Canada is for sale to foreign governments*,'' Harper said at a hastily called news conference.
> 
> "The government's concern and discomfort for some time has been that very quickly, a series of large-scale controlling transactions by foreign state-owned companies could rapidly transform this (oilsands) industry from one that is essentially a free market to one that is effectively under control of a foreign government.''





> The takeover gives CNOOC control of Nexen's 43 percent stake in the Buzzard field in the North Sea, the most important
> contributor in the crude blend used to for Brent international pricing benchmark.
> 
> CNOOC has asked the U.S. government to review its bid for Nexen's offshore oil assets in the Gulf of Mexico. CNOOC said
> last week the review was underway, and a Washington spokesman declined further comment on Friday.


Uh..isn't this takeover of the oilsands, just the beginning? It's just like the game of monopoly. While the shareholders
of Nexen may reap some kind of short term gain..the long term pain will be for all Canadians that depend on oil
in their daily lives. The Harper gov't is allowing the purchase of Canada's resources by foreign gov'ts bit by bit, and in time, what little control Alberta had, will be lost forever.

While I'm not suggesting we go back to the Trudeau days and the NEP (National Energy Policy), where the gov't had complete control over oil resources..it seems that the Harper gov't with it's huge deficit and national debt is hoping for some windfall from those deals.
Sellout now and don't worry about what can happen in the future...maybe we will still see a third officiall language for Canada..Chinese?




Comments?


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## Nemo2 (Mar 1, 2012)

I guess the threat of 'foreign ownership' is (at least partially) offset by the possibility of nationalization, should 'circumstances warrant it'? Also, (and I know absolutely zero about this), how about the prospect of (drastically) increased royalty charges levied against companies/countries whose influence is deemed 'undesirable to national interests'?

(I seem to recall, a few years ago, (some) people being upset that The Bay was "A Canadian company being taken over by Americans" , when in actuality it belonged to the shareholders, and it didn't matter one whit who _they_ were.)


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## kcowan (Jul 1, 2010)

They have rules about % foreign ownership, e.g. 33% for telecom, and I think they are free to adjust these whenever it suits them. I suspect there is a quid pro quo for some more trade with these countries. If all these countries want is guaranteed access to oil, then we would get market diversification away from the US. That would be a good thing.


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## sags (May 15, 2010)

The Chinese use paper money to buy hard asset.

The Chinese sell the produce from the asset for paper money.

The Chinese end up with both paper money AND asset.

A good deal for them. It might be a good deal for us too, if we could take that paper money and replace the asset for less. But it seems the asset and the money just disappear. 

In the case of severe shortage of food or oil...........would the Chinese give it up in exchange for paper money?

I think not.


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## sags (May 15, 2010)

I recently read an article detailing all the "investment" China has in the oil sands, and it is far greater than these two assets, through various back door ownership/investment structures.

Today, the price looks good..............what about in 20 years?

If the plan is to screw the Chinese, in the event of shortages etc.........we should take note that China is emerging as the world's premiere military power and will defend their interests worldwide. That is what they are spending Trillions building up their military to do.

Part ownership with the Chinese, I could believe in, because we would both have a vested interest in the partnership.

But complete takeover sales...............I would worry about that.


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## Spidey (May 11, 2009)

It sounds as though most of the Liberal contenders are also for this deal, so I guess anyone who is strongly against it will have to vote NDP. 

I worry much more about foreign ownership of movable entity like a tech company than with resources. After all, it's not as if they can pick up the oil sands and move them to China. All royalties, taxes and most of the work stays here. Plus it may mean an infusion of cash to help develop the resource further. I do agree that there has to be a couple of extra regulations for foreign owners, but I don't see a great deal of downside. And after all it is a 2-way street. Canadian companies control oil and mining resources in many other countries.


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## Islenska (May 4, 2011)

Nexen was/is such a crappy company we should be paying the Chinese for buying it.

CNOOC will bend over backwards to be a model business in the oilpatch,what if the Conrad Blacks purchased it, now that you could grumble about.

I'm a relieved long suffering Nexen shareholder.


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## carverman (Nov 8, 2010)

sags said:


> Today, the price looks good..............what about in 20 years?
> 
> If the plan is to screw the Chinese, in the event of shortages etc.........we should take note that China is emerging as the world's premiere military power and will defend their interests worldwide. That is what they are spending Trillions building up their military to do.
> Part ownership with the Chinese, I could believe in, because we would both have a vested interest in the partnership.
> But complete takeover sales...............I would worry about that.


The Chinese like most countries out there now are in oil based world economy.

Buy selling out now..we will pay for it in the future. Yes, there will be some capital injected into the tar sands in the near term and maybe other areas as well..but this will come at a price. 

China does not need our paper money..they need our resources and oil is one of the most important, because their economy now depends on oil more than it ever has in their history.

You think that Big Oil have us over a barrel now?..wait 10-20 years down the road when the Chinese will be selling us our own oil at world prices...and that will be any oil that will be left over after they ship most of it to China by tanker.

There already is interest in expanding the pipelines to the west coast (BC) and setting up massive oil terminals like in Saudi Arabia.

We will be exporting most of our resources and raw materials to China and elsewhere...to create nore jobs over seas.


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## Spidey (May 11, 2009)

Islenska said:


> Nexen was/is such a crappy company we should be paying the Chinese for buying it.
> 
> CNOOC will bend over backwards to be a model business in the oilpatch,what if the Conrad Blacks purchased it, now that you could grumble about.
> 
> I'm a relieved long suffering Nexen shareholder.


I was watching Eric Nuttall from Sprott on BNN and he made a similar comment - not really about Nexen being a crappy company, but more along the lines of "It's not as if we are selling the crown jewel of the oil sands" and that the Harper government, or likely any government would never allow massive oilsands ownership by foreigners. I guess the entire world could put up walls and lock everyone out from owning even these minor companies but I don't think that's what free markets are all about.


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## jcgd (Oct 30, 2011)

I have two close friends who work at Nexan, and then know half a dozen others who work there through them. They were saying they would pretty much be toast if the sale didn't go through.

I look at this as a good thing. Canada needs to be able to invest in China, and it's a give/take relationship. If we keep telling China no, they are going to tell us no. We live in a world that's going global. We can take the chance now to branch out into our neighbours or we can sit here hoarding what we have and hoping for the best when the world globalizes without us. Personally I think it's good that Canada gets some diversification. Having all the oil and gas is great today. What happens down the road if we have oil and gas, but not much else and oil and gas gets disrupted?

It also might be nice to have a superpower have a vested interest in protecting what's here. Who's to say they wont just take down the road, what they are buying now? Whether we like it or not, in my lifetime this is going to be global economy. I'd rather not be one of a handful of countries who will be cut off from the world. We call everyone foreign but I think that term is outdated. I can talk to someone in Sweden just as easily as some random down the street. I say roll with the times and get on board or you'll be sitting in your basement sweating that all of your neighbours are Asian, and your grandchildren are half Asian, and everybody else's children are Asian.

Foreign investment... pfft... give me a break. 

http://www4.hrsdc.gc.ca/[email protected]?iid=38_
In 2006, nearly 2 million people, or 6.3% of the total population, were immigrants who had arrived during the previous 10 years._ 

That's just ten years, so what percentage of the population immigrated here over that last 20 years, 50 years, 150 years? We are all immigrants here, save for the natives. We took it from them, Chinese take it from us, the new world ethnicity will have it in the end. Those who try to desperately hold their individuality in the extremes will end up alone and eventually non-existent. Adapt or die, simple as that.


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## HaroldCrump (Jun 10, 2009)

There has been no news yet on any reciprocity agreements with China.
For instance, are they going to allow Scotiabank to increase its share in Bank of Guangzhou and Bank of Xian to more than 20%?
Are they going to allow Canadian financial institutions to have more than 20% shares in more than 2 companies?

I'd hope there is at least some tacit reciprocity understandings with the PRC.


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## HaroldCrump (Jun 10, 2009)

Islenska said:


> Nexen was/is such a crappy company we should be paying the Chinese for buying it.


Here is a similar opinion:
_Maybe *we* are exploiting China_

http://www.canadianbusiness.com/article/94399--maybe-we-re-exploiting-china


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## Rusty O'Toole (Feb 1, 2012)

Once again, our political leaders are selling out Canadians. We should be used to it by now, it has been going on so long.

What would be wrong with Canada keeping ownership and control of the oil sands, and selling the oil to the highest bidder? Including the Chinese?

I have a feeling in a few years, this will look like a much better deal for the Chinese but by then it will be too late. I suspect they are taking a much longer view, than what happens at the next election. More like preparing for the next generation or the next century.


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## Spidey (May 11, 2009)

I have a couple of questions for those opposed to this deal, not to be confrontational but because I am interested in the answers.

1. What do you see as the worst case scenarios from these particular deals? 

2. Given these worst case scenarios why is it that a couple of the Liberal leadership contenders, including Justin Trudeau, have come out in favor of them when they could have likely gained more political points by taking the opposite position? 

3. Is it only foreign entities buying Canadian resource companies that should be banned or should also Canadian companies also be banned from buying foreign resource entities?


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## GoldStone (Mar 6, 2011)

Rusty O'Toole said:


> Once again, our political leaders are selling out Canadians.


No sir. Nexen/Progress shareholders are selling their privately owned shares, that's all.

Do you personally own any shares?
If you do: are you not happy to sell them at a fat premium to the highest bidder?
If you don't: WHY?



Rusty O'Toole said:


> What would be wrong with Canada keeping ownership and control of the oil sands, and selling the oil to the highest bidder? Including the Chinese?


1. Nexen tried to make a business out of it. It didn't work too well.
2. Canadians (or, more precisely, Albertans) still control the resource. We exert the control via royalty taxes. We can choose to set royalty taxes so high that oil extraction will become uneconomical. In which case the oil will stay in the ground. Will that make you happy?



Rusty O'Toole said:


> I have a feeling in a few years, this will look like a much better deal for the Chinese but by then it will be too late.


It's never too late. If oil prices shoot through the roof, we can raise royalty taxes to collect more revenue. OTOH, Chinese buyer won't get a refund if oil prices plunge. Seems like a good trade-off to me.


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## Argonaut (Dec 7, 2010)

Glad the deal went through. We can't be protectionist.


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## lonewolf (Jun 12, 2012)

How much oil is really out there ? A lot of the so called oil experts had us running out years ago, well other experts say the world is swimming with oil & we will never run out.

If the world is swimming with oil & with the use of modern technology perhaps it will be easier for countries to bring to market making it a time to sell oil.

Are the oil sands important to Canadas natural gas supply? Perhaps in the future oil will become less important i.e., cars could run on natural gas or go electric.


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## carverman (Nov 8, 2010)

lonewolf said:


> How much oil is really out there ? A lot of the so called oil experts had us running out years ago, well other experts say the world is swimming with oil & we will never run out.


Well, if you can believe the statistics on world oil reserves by country, Canada is second only to Saudia Arabia in oil reserves. Canada, probably includes estimates of the tar sands as well at 178 billion barrels...... with Saudi at 262 billion.
http://www.nationmaster.com/graph/ene_oil_res-energy-oil-reserves

The US is way down the scale at 22.5 billion barrels and China at 18 billion barrels in known estimated reserves. 

As far as oil consumption, the US (pop. 313 million) and China at 1,339,724,852 are the greatest consumers of oil. China will probably be up there soon as their lifestyle change due to their
rapid economic growth.
US consumes over 18 million barrels per day and China where the lifestyle is changing so that the average worker can now afford a car is consuming 8 million barrels per day. The oil consumption in China is expected to increase.
http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption


> If the world is swimming with oil & with the use of modern technology perhaps it will be easier for countries to bring to market making it a time to sell oil.


I think this is the Harper gov't's plan. 



> Are the oil sands important to Canadas natural gas supply? Perhaps in the future oil will become less important i.e., cars could run on natural gas or go electric.


This could be done now, but the auto industry and refilling stations in NA and their supply infrastructure has to change over gradually.
This make take a few years for the conversion to occur.
While there are cars and trucks that run on propane today..how many propane filling stations are actually out there today in comparison to gas pumps?

The demand has to be there for major oil to convert their stations. I don't think that the major nat gas exploration (oil wells and pipelines) are willing to merge with major oil. It may happen eventually, but this may take a few years.


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## sags (May 15, 2010)

A couple of downsides that could occur, I think.................

The current management of companies taken over by the Chinese, may want to start looking for a new job. They have the tendency to bring in their own management staff from China. I think it is relatively easy for them to do at the management level...........not sure if they could bring in Chinese labor at the business end of a shovel.

As the new owners, the Chinese will be able to bid on government lands at auction. They have no reluctance to overbid the price to secure assets they want, and the cost could drive expenses up for other companies.....if not block them out entirely.

How do we feel about China securing future land for exploration?

Today, it was announced the Chinese purchased minority shares in an Australian natural gas company. An analyst said China has been scouring the world for any commodities they can purchase and control. He said they have a long term plan to own as much as governments are willing to let them.

The question may not be about buying these particular companies, but where is this all heading for the future.

The Chinese are taking baby steps today...............but what if they wanted to gobble up some of the big companies?

Not sure what our Canadian strategy is...............Harper's government hasn't been real clear on it.


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## sags (May 15, 2010)

Today another announcement about PetroChina buying Encana's best properties.

Another day.................another takeover.


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