Foreign oil, gas investment strong in Canada

Oct 24, 2013 12:00 AM

Foreign investment in Canadian oil and gas, a topic that raised governmental concern when CNOOC Ltd. of China last year announced plans to acquire Nexen Inc. of Calgary for $15.1 billion, has averaged $20 billion/year since 2007, reports the Canadian Energy Research Institute (CERI).

CNOOC completed the Nexen takeover in February, helping China remain the leading non-Canadian country of origin for oil and gas capital invested in Canada.

Since 2007, the oil sands region has attracted $50 billion of investment from outside Canada, according to a CERI study. The Alberta Foothills region attracted $26 billion during the period and British Columbia, $21 billion.

“The East Coast has also been a popular destination for foreign investors, either through farm-in deals or through gaining licenses issued by the New Brunswick, Nova Scotia, and Newfoundland governments,” CERI says. Saskatchewan’s Bakken play remains mostly a domestic investment, and remoteness and lack of transportation have damped investment in the resource-rich Yukon and Northwest Territories.

CERI says Canada is attractive to foreign investors because it provides full access to oil and gas reserves and, as a nation of laws, has low country risk, “which is rare among oil and gas-producing nations.”

Of about $100 billion in total foreign investment in Canadian oil and gas during 2007-13, CERI says, 28% has been from China, 19% from the US, and 15% from the UK and Netherlands together. Smaller shares of the total are United Arab Emirates 8%; Malaysia 7%; and South Korea, France, and Japan, 5% each.

When the Canadian government last December approved the CNOOC acquisition of Nexen, as well as the $5.5 billion acquisition of Progress Energy Resources Corp. of Calgary by state-owned Petronas of Malaysia, it expressed concern about rising ownership of Canadian oil-sands properties by state-owned enterprises. It said it would approve further such acquisitions “on an exceptional basis only.”

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