The Canadian Conservative government of Stephen Harper approved the $15.1 billion takeover of Nexen by CNOOC a Chinese state-owned enterprise, but will not approve any further takeovers by state-owned enterprises.
The Conservative government has been trying to attract investment from sources outside the U.S and in return hopes that our natural resources will find new markets by meeting the demand of developing countries such as China. However, the Harper government is mainly a servant of international private global capital as exemplified by large oil companies. They will now be able to take over ownership and control of our resources while state-owned enterprises will not.
This new policy certainly will not prevent state-owned companies from investing in our energy resources. They simply will not be able to purchase a stake large enough to ensure ownership or control. Many Canadians apparently worry about foreign control of our energy resources. However that worry is a bit late: More than two-thirds of all oil-sands production in Canada is owned by foreign entities, sending a majority of the industry's profits out of the country, says a new analysis released Thursday by a British Columbia-based conservation group. That analysis was made last May before the CNOOC takeover of Nexen. Most of Nexen's holdings are not even in Canada.
Harper told reporters:"To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead.Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada."
The Conservative and Liberal governments have been reducing ownership of the economy by the Canadian government so that profits can be made by global private capital, as can be seen by the fact that our oil resources and other sectors such as manufacturing are often foreign owned. Global capital thanks the Conservatives by being a major source of funds for the party. We gave up sovereignty over our energy resources once we signed on to NAFTA: NAFTA also prohibits Canada from charging a lower price to domestic oil consumers than to those purchasing exports. It's common practice for countries that are self-sufficient in oil to give domestic oil consumers a discount from the world price, in essence, to control domestic prices. Back in March of this year when vaulting oil prices pushed up the cost of refined products such as gasoline, residents in some oil-rich countries hardly noticed. Kuwaitis were paying 81 cents per gallon for gasoline. Saudis paid 45 cents. And, Venezuelans were paying just 6 cents.
So whatever we charge the U.S. for oil or gas we must charge Canadians the same or more. The government does not have any control over this. We cannot even reserve more of our production for Canadians in an emergency: The North American Free Trade Agreement (NAFTA) prevents Canada from reserving more its oil production to itself in the event of an emergency. Canada is obliged to maintain the same ratio of exports to total production that prevails in any preceding 36-month period. Mexico the third signatory to NAFTA would not sign on to this part.
A Malaysian state-owned company Petronas also had its $5.3 billion offer for Progress finally approved. CNOOC may face problems in the U.S. as Nexen has oil assets offshore in the Gulf of Mexico. Perhaps Washington may want to reserve those reserves for private Big Oil such as BP or Exxon!
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com