Peter Foster: Not much to fear from CNOOC

The takeover in no way represents a ‘predator’ stealing ‘our’ oil

The proposed $15.1-billion takeover of Calgary-based Nexen Inc. by majority Chinese state-owned CNOOC has inevitably brought out the reflexive economic nationalists, wailing collectivists, fretters about “hollowing out,” champions of “national champions” and peddlers of muddled metaphors.

Certainly, there is legitimate cause for concern about the degree to which Beijing might dictate to CNOOC, but the takeover in no way represents a “predator” stealing “our” oil. The Nexen board has approved the deal, which offers shareholders a 60% premium over the pre-bid price. Alberta and Ottawa retain significant power over Nexen, from ownership of the resource through regulation of exploration and development to stock market oversight and corporate taxation.

One of the more bizarre criticisms of the deal is that CNOOC’s preferential access to capital might put it in a position to outbid rivals. But should shareholders worry about the possibility of being overpaid?

One pundit suggested that it was “ironic” that Calgary was ostensibly welcoming CNOOC after the hard time it allegedly gave to Canadian state oil company PetroCanada when it turned up in the 1970s. In fact, Calgary quickly came to love PetroCan because it was dumb and thus ripe to be plucked. The bad news was that it was dumb with taxpayers’ money. That problem inevitably doesn’t arise – at least for Canadian taxpayers – with CNOOC, although I don’t mean to insult CNOOC by suggesting it might be as financially feckless or deceptive as Canada’s state oil boondoggle.

Financial Post

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15 responses to “Peter Foster: Not much to fear from CNOOC

  1. Does JunkScience.com receive any funding from China?

    • JunkScience.com doesn’t receive much funding full stop. Whether Chinese readers donate through PayPal or the JS Store I wouldn’t know since that goes to Steve to pay for site hosting and bandwidth.

      If your question is “has China purchased our opinion” then the query is insulting – it is also poorly directed since the piece you have responded to is actually in Canada’s Financial Post, with whom I have no relation or contact whatsoever. –Ed.

  2. Since JS appears to offer numerous opinions against UN global governance, what is your opinion on Chinese state-owned enterprises taking over the Canadian energy sector?

    • Well if it ever looks like a “takeover” I’ll likely offer an opinion but it’s still a matter of they can only buy what people are willing to sell. If you are asking whether I am against foreign investment then the answer is no, not at all, any more than I am against North American investment offshore. Apparently you are quite exercised about it though.

      • Yes, I figured you’d pass on that article. Junk science, indeed, it is everywhere, isn’t it?

        • Alright, I’ll bite. What’s the junk science angle to my not being  offending  offended [it's late down-under] by international investment? I can hardly support U.S. or Canadian ownership/investment/partnership overseas while objecting to the reverse, can I?

          [edited pranglish - badly!]

          • There is a fundamental difference between foreign investment by democratic nations (and their firms) and that by authoritarian regimes (and their proxies). If you don’t see that, or choose to ignore it, then your apparent concerns over UN global governance and other statist agendas (e.g., AGW) appear to be hypocritical. They are different faces of the same coin. I suspect we’ll agree to disagree on this issue. Too bad, though, as I think your site plays an important role in other ways. I value freedom and other basic human rights too much to ignore unprincipled conservatism that potentially threatens my liberty (so, yes, I am “exercised” about the issue, and will continue to be).

            As for the specifics of Chinese SOEs investing in Canada, Francis’ article raises a number of very important concerns that warrant a public inquiry in Canada, and which I have not seen any other journalists or other commentators either rebut or even serious discuss (including and especially Foster’s naive jibberish – too bad, he makes good points about the problems with climate alarmism and sustainable development, but if he’s with the China-is-fine crowd, he’s lost my support [although I doubt he and others could care less what I think, and vice versa]).

            Issues such as these are exactly why – in your country – the GOP is still having a difficult time driving down support for Obama, and why – in Canada – we have much more popular support for leftist parties than we do for our so-called Conservative Party. Free market capitalism is the answer, but we need to stop pretending that investment coming out of a communist police state in any form is “free market capitalism,” because it aint.

            • Firstly, I’m an Aussie and I don’t pretend to present any American perspective and secondly Australia does a lot of business with Communist China while criticizing their record on human rights, lack of democracy and restrictive trade practices. We don’t preclude their investments and we don’t treat them as especially different from most other countries, everybody must meet the same national interest tests. If you are particularly worried about Chinese foreign investment in fuel supplies get Obama and his cronies out of the way so that dilbit is not stranded.

              All that aside I still favor free markets and nothing about CNOOC’s purchase strikes terror in my heart. To do otherwise smacks of protectionism and national jingoism (fine as far as it goes but you’d have to disapprove outward investment and I’m just not going there).

            • Sierra Rayne

              Complete uninformed nonsense to call concerns over CNOOC’s takeover as “protectionism and national jingoism,” given how many of us opposed to the deal welcome effectively unrestricted foreign investment from any and all democratic nations. So how does your simplistic categorization deal with that? What does it say about the failure of western liberal free market democracies when the only ones with the money for the CNOOC-Nexen deal are communist police states? And how well has economic engagement with commie China worked out in terms of improving China’s democratic and human rights record over the past 30 years? Care to discuss actual data with me?

              As for Australia, it’s an absolute hypocritical waste of time to publicly whine about another nation’s brutal human rights record and then take their money. Where do you think communist China’s government gets its money to invest in Australia? Yes, some comes from the minority shareholders around the world, but most comes from this authoritarian regime’s abuse of its own people (i.e., proceeds of crimes against humanity). Australia’s position is pure incoherent and unprincipled nonsense. If Australia wants to sell out to China, fine. But Australians shouldn’t come whining to Canada for help if and when China’s South China Sea territorial ambitions begin extending a little farther south.

            • Wow. Not to rain on your parade but I don’t think Canada’s armed forces are likely to intimidate China too much. Whatever.

              Wrt where I think they got the money? Mainly from Western consumers buying made-in-China goods. Doesn’t worry me any more than buying Japanese goods before that, Korean goods in between or southeast Asian goods now.

              Should I be imposing my view of acceptable standards on other countries, probably not, not at least until I have my own house in order and I doubt even then. That said, are Chinese conditions improving with increasing affluence, you betcha. And they are improving across the populace, although they did start from a long way behind and have a long way to go.

              None of that of course has any bearing on or relevance to my not feeling major alarm over CNOOC’s purchase of Nexen. Canada would be extremely foolish not to increase market opportunity for dilbit, especially with the Obama administration playing ducks and drakes over Keystone. Even with KXL the U.S. is still a discount market for you whereas CNOOC is more likely to help unlock international trade value. Don’t view that as nationally harmful for you either but Canadians did have the choice of putting up a better offer for Nexen.

  3. Here is a more rigorous analysis of the CNOOC-Nexen deal that you can feature on your site if you havent already, and if you so desire:

    http://opinion.financialpost.com/2012/07/27/stop-state-backed-foreign-buyouts-in-canadas-resource-sector-now/

    • I think I’ll pass thanks, I’m against the basic premise of trade and investment restriction. If I were concerned strategically then my concern would be failure to approve the Keystone XL pipeline project which is pushing Canada to find alternate outlets lest their resource become stranded.

  4. Yes, China does make money off selling the West cheap goods, made under socio-economic and environmental conditions that would be unacceptable in democratic countries. Thanks for emphasizing my point that Chinese SOE foreign investment is effectively stolen from its citizens.

    • Hmm… ‘stolen from its citizens’. Are you talking about confiscatory Western socialist government taxation?

      Whatever, it’s the small hours of the morning down-under and that’s it for me.

      • Nope, I’m talking about the commie money you love. But it also applies to “confiscatory Western socialist government taxation.” They’re both wrong. It’s called principled conservatism. Look it up.

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