Canada Opposition Demands Public Hearings on CNOOC-Nexen Deal

OTTAWA - Canada's main political opposition party demanded Tuesday the Conservative government hold public hearings on Beijing-controlled CNOOC Ltd.'s proposed takeover of Calgary's Nexen Inc., saying the government review of the $15.1 billion-dollar transaction lacks transparency.

The left-leaning New Democratic Party stopped short of saying it was opposed to the deal as structured. But the NDP has introduced a non-binding motion in the Canadian legislature to demand the federal government seek public input through hearings before it issues a ruling on the CNOOC deal.

Under Canada's foreign-investment rules, government officials vet a proposed transaction to ensure it offers a so-called net benefit to the Canadian economy. The NDP motion also calls on the Conservative government to publicly clarify what is means by "net benefit."

"We favor foreign investment that leads to development," said Peter Julian, a Vancouver-area NDP legislator. "But the question about this particular deal is quite different. The problem we have is we don't have a level playing field, either for the public or the investors, because the government hasn't spelled out net benefit."

A vote in parliament on the NDP motion is scheduled to take place on Wednesday, though the NDP doesn't have enough votes to get the motion passed on its own, and isn't likely to garner Conservative support. A spokeswoman for the Prime Minister's Office said the Conservative government "always acts" in Canadians' best interests, and that this transaction would be scrutinized "very closely."

The NDP, to date, has focused on the process under which the CNOOC deal is being reviewed, and not on issues regarding the merits of foreign investment or CNOOC's ability to live up to pledges such as boosting capital investment and keeping present Nexen employees on the payroll. NDP officials say that will continue to be the focus, as the party can't proclaim their support or opposition to a proposed foreign deal without knowing what's acceptable under the rules.

The last deal nixed by the Canadian government was BHP Billiton Ltd.'s proposed deal for Potash Corp. of Saskatchewan back in 2010, amid strong political opposition from Saskatchewan's provincial government and its populist premier, Brad Wall.

Such provincial opposition is absent this time around. The CNOOC deal got a boost on Monday after the premier of resource-rich Alberta, Alison Redford, told the Calgary Herald newspaper that the China-led transaction provides "a lot of benefit" to Canada, and that she believed the deal "should go ahead."

Copyright (c) 2012 Dow Jones & Company, Inc.


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