OTTAWA - Canada's main political opposition party said Thursday the Conservative government must reject Beijing-controlled CNOOC Ltd.'s planned $15.1 billion takeover of Calgary, Alberta-based Nexen Inc., because Canadian concerns about the deal can't be addressed through what it calls an "opaque" investment-review process.
The decision from the left-leaning New Democratic Party comes less than 24 hours after the Canadian legislature formally rejected the party's demand to hold public hearings on the proposed deal, which is being reviewed by the Canadian government.
Under Canada's foreign-investment law, approval hinges on whether the deal is determined to provide a so-called net benefit to the country's economy. The federal government has the power to block the deal if it believes it isn't in the country's economic interest.
The NDP has complained that the process goes on in secret, and that there's no clarity as to exactly what net benefit means.
"We cannot support the rubber-stamping of this deal," said Peter Julian, an NDP lawmaker who represents the Vancouver area. "The public confidence in the government's ability to handle and review this transaction has eroded," he said.
Mr. Julian said that, in discussions with the public and other interested parties, his party heard concerns about CNOOC's ability to live up to its pledge to keep current Nexen employees; national security fears, given the close ties between CNOOC and China's rulers in Beijing; and CNOOC's environmental stewardship.
Nexen has oil and gas assets in western Canada, the U.K. North Sea, the U.S. Gulf of Mexico and offshore Nigeria.
Representatives for CNOOC and Nexen weren't immediately available to comment on the NDP's opposition to the deal. Attempts to reach Canadian Industry Minister Christian Paradis, who is overseeing the CNOOC review process, weren't successful.
The Conservative government has a majority of the seats in the Canadian legislature, so the NDP has no power to block the deal. However, its vocal opposition could cause problems for the government, and persuade Canadians to consider the implications of allowing CNOOC, a Chinese state-owned enterprise, to obtain such a big footprint in the Alberta oil sands.
Canadian government officials are said to be under pressure from some stakeholders, most notably the province of Alberta, to exact better terms from CNOOC before its deal is approved, in terms of firmer job and investment guarantees, and ensuring major Canadian representation on the board and in the executive suite. To date, CNOOC has pledged to make Calgary the headquarters for its North American operations, list its shares on the Toronto Stock Exchange and keep current Nexen employees.
Copyright (c) 2012 Dow Jones & Company, Inc.
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