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Harper OKs Nexen deal; says takeover marks 'end of a trend'

The Canadian government has approved CNOOC's $15.1 billion bid to acquire Alberta oil sands producer Nexen, the largest foreign takeover in Canada's history.

But Prime Minister Stephen Harper made it clear he's not entirely comfortable with state-owned enterprises acquiring Canadian firms, saying today's deal marks "not the beginning of a trend, but rather the end of a trend."

"To be blunt," Harper reportedly said, "Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead."

Though Nexen is headquartered in Calgary, Alberta, it has operations in the North Sea, the Gulf of Mexico and West Africa. Today's Canadian government announcement follows news that the European Commission approved parts of the CNOOC deal under its jurisdiction.

The U.S. must also review the deal, though a decision has not yet been made.

"I have serious national security concerns with the Chinese government, acting through one of its corporations, purchasing a company that will give it control over significant U.S. oil and gas resources," U.S. Republican Senator James Inhofe said last summer.

Should the deal be blocked in Washington, CNOOC's takeover would still go ahead, with some modifications, University of Ottawa law professor Debra Steger told Maclean's Magazine.

"If the investment is not ultimately approved in other jurisdictions," she said, "Nexen and CNOOC may have to restructure their overall deal relating to Nexen’s assets in those countries."

Shares of Nexen surged today after the Canadian government's announcement. So too did Canada's dollar, relative to the U.S. dollar.

Chinese state-owned companies have been the subject of much debate in Canada over the past year. In a Tyee investigation from last Feburary, Andrew Nikiforuk wrote that Sinopec, another major oil and gas firm owned by the Communist government, "has a long record of corruption, human rights violations, environmental pollution and doing business with terrorist-linked governments."

The Harper government also approved the bid by Petronas, owned by the Malaysian government, to take over natural gas producer Progress Energy -- a deal which it had earlier rejected.

Geoff Dembicki reports on energy and climate change for The Tyee.


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