Alberta Appeals for China Investment After Rules Curb Oil DealsRebecca Penty
Alberta’s energy minister will urge Asian firms to invest in Canada’s largest oil-producing province after restrictions imposed by the federal government on foreign state-owned firms helped curb deals.
Ken Hughes will seek to clarify Canada’s foreign-takeover rules in meetings with energy companies, including China National Petroleum Corp., on a 10-day trip to the region starting today, he said. In announcing changes in December, Prime Minister Stephen Harper said foreign state-owned companies would be allowed to buy oil-sands businesses only in “exceptional circumstances.”
“There’s been a knock-on quieting of investment,” across the province, Hughes said in a phone interview yesterday from Calgary, emphasizing the rules only affect the oil sands. “The message is that Alberta is one of the most predictable, reliable, mature investment locations in the world.”
Harper is asserting control over the nation’s resources after about $51 billion in investments by state-owned firms in the Canadian oil and gas industry over the last seven years, according to data compiled by Bloomberg. Deals in the industry have fallen to $8.4 billion in the first nine months of this year in Canada, down 79 percent from $40.5 billion in mergers and acquisitions over the same period last year.
Alberta, home to the world’s third-largest crude reserves in the oil sands, requires outside capital and labor to develop its resources, Hughes said. The new foreign-takeover rules came as broader investment in the energy sector was falling due to factors such as lower oil and gas prices, he said.
Hughes plans to talk to a “long list” of representatives from state-owned energy companies on his trip to Korea, Japan and China, including CNPC, China’s largest energy company, China Petrochemical Corp. and Cnooc Ltd., he said. Companies Hughes will meet with in Japan include Japan Oil, Gas and Metals National Corp., Japan Petroleum Exploration Co. and Idemitsu Kosan Co., according to his schedule posted online.
The trip is the first by Hughes outside North America as minister and follows a visit by Alberta Premier Alison Redford to China last month. Speaking on a conference call from Shanghai Sept. 17, Redford said she wants the Canadian government to clarify under what conditions it would allow Chinese state-owned companies to make investments.