The conservative government of Canadian Prime Minister Stephen Harper has been assiduously touting China as a vast new potential energy market for Canada’s hydrocarbon exports, most notably Alberta’s rising bitumen oil sands production.
How the citizens of the Canada’s Alberta province feel about Harper’s outreach to China, which is seeking to acquire Canadian energy assets, has been revealed in a recent survey by the China Institute of the University of Alberta.
Why the fuss?
Three months ago China’s State-owned China National Offshore Oil Corp. proposed buying Canada’s Nexen Inc., paying roughly $15.1 billion would for Nexen Inc.'s common and preferred shares. Nexen Inc., an oil and gas company based in Calgary, Alberta, has worldwide operations including the North Sea, Colombia, the Gulf of Mexico, and Alberta's Athabasca Oil Sands.
In its second annual survey of Albertan public opinion, “2012 Annual Alberta Survey – Albertan’s views on China,” which polled 1,210 people, the Institute found that the province’s population’s views on China’s increasing regional influence are mixed at best. Harper recently acknowledged as much in response to a recent question in the House of Commons in Ottawa, with Harper admitting that that Chinese companies have been able to invest easily in Canada, while Canadian investments in China have been more difficult, telling his House of Commons audience in the capital Ottawa, “Canada has had a situation with the People’s Republic of China for some years where their investment has been virtually unrestricted here and we have had more difficulty with our investment there.”
And the survey?
According to the University of Alberta’s China Institute director Gordon Houlden, “They are opposed to the idea of full ownership by China and are also adverse to investments in Alberta by Chinese State-Owned enterprises, when you talk about Chinese SEO’s, the numbers are negative. It’s hard to know from the survey whether it’s just China or foreigners owning Albertan businesses. But clearly when you get to full ownership, or ownership by Chinese State Enterprises, the resistance to selling the properties (oil properties) starts to spike considerably. We’re a few weeks away from a federal decision on that sale, so this is now highly timely information. This is not by any means a blue print for action. It’s simply stock taking of the views of Albertans in the summer of this year, and on the positive side a solid majority of Albertans support selling Albertan oil to China.”
The essence of the survey?
“Questions concerning the issue of Chinese investment in Alberta, however, solicited more guarded responses. While Albertans are evenly split on the issue of whether partial ownership of an Alberta-based firm by Chinese investors is acceptable, they are decidedly opposed to the idea of full ownership, and are also largely adverse toward investment in Alberta by a Chinese state-owned enterprise (SOE).”
Speaking further about the poll, Houlden added that the numbers were much more extreme when it came to full ownership of Nexen by China, with only 15 per cent agreeing it would be acceptable, 64 per cent disagreeing and 21 per cent neither agreed nor disagreed, noting, "When it comes to investment, Albertans are on balance negative in their views. When it comes to full ownership, in particular, of Alberta-based companies by Chinese enterprises, it's seen as undesirable. On balance, it's a mix of positive negative. Albertans are quite conflicted in their views of China.”
Houlden is hardly uninformed, as he is a former Canadian diplomat who's been posted five times to China.
The Nexen-CNOOC deal is currently being evaluated by federal Industry Minister Christian Paradis, who conclude by 11 November whether the transaction is of "net benefit" to Canada.
CNOOC’s anxieties over approval of the contract have been heightened since Ottawa's surprise rejection on 19 October of Malaysian company Petronas' $6 billion proposed of Calgary-based natural gas producer Progress Energy Resources.
So, which will win out?
Rising Canadian xenophobic nationalism or Ottawa’s commitment to “free trade?”
The answer is currently unclear, to put it mildly.
By. John C.K. Daly of Oilprice.com