Reuters: Regulatory News: UPDATE 1-Harper confidante highlights CNOOC-Nexen concerns

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UPDATE 1-Harper confidante highlights CNOOC-Nexen concerns Nov 30th 2012, 17:21 Fri Nov 30, 2012 12:21pm EST * Kenney notes rigorous analysis planned for state firms * Kenney is known to have reservations on CNOOC bid * Says Canadian values had been neglected in dealing with China * Says recent investment pact speaks to reciprocity By Randall Palmer OTTAWA, Nov 30 (Reuters) - A Canadian cabinet figure known to have reservations about CNOOC Ltd's bid to buy Nexen Inc on Friday underscored Prime Minister Stephen Harper's concerns about takeover bids by foreign state-owned enterprises. Immigration Minister Jason Kenney said Harper had stressed the importance of preserving Canadian values, such as human rights, in dealing with China. But Kenney, a Harper confidante, conceded a foreign investment agreement that Ottawa recently reached with China provided much-needed reciprocity. Kenney's remarks pointed to the depth of the debate within the government over whether to approve state-owned CNOOC's plan to buy the energy producer. Shares of Nexen, which were up before Kenney spoke, gave back some their gains afterwards. "The prime minister...has underscored our government's particular concern about large-scale, proposed acquisitions by state-owned enterprises and the need for a rigorous analysis to be undertaken for such applications," Kenney said when asked about his views on CNOOC during a news conference on Canada's refugee policy. The government has set a Dec. 10 deadline for deciding whether to approve the deal. Ottawa says that at the same time it will unveil updated guidelines for foreign investment. When reporters asked if a consensus had formed among cabinet members on how to treat companies owned by the Chinese government, Kenney declined to speak about any deliberations but said: "Our prime minister has consistently articulated a balanced approach to our relationship with China that emphasizes, yes, our commercial interests, but also our values, in a way that the previous policy was unbalanced, having largely neglected the values dimension of the relationship." One of the concerns with China's $15.1 billion bid is the possibility that Beijing will scoop up large chunks of Canada's natural resource sector and may not operate purely from commercial motives. Even so, the Canadian government has also spoken of the need for foreign investment to develop its resources. Harper has stressed repeatedly to Chinese officials that the economic relationship must be a two-way street. Kenney suggested the recent investment agreement had addressed that issue, at least in part. "One of the key reasons why we finalized the Foreign Investment Protection and Promotion Agreement (FIPPA) after 18 years of negotiations is to provide for a degree of reciprocal protection for investment on both sides," said Kenney, whose reservations about the deal stem in part from his concern over human rights. In the past, he said, Chinese investors would benefit from Canada's legal protection but Canadians did not have the same protection in China. "So as far as I'm concerned, the FIPPA gives us a great deal of reciprocity," he said. "Now Canadians will have some enforceable legal remedies to protect their investments in China." Nexen shares had been under pressure this week because of a possible delay in the U.S. regulatory approval process, but the Canadian government signaled late on Thursday that the U.S. deliberations would not affect Canada's review. Nexen stock moved as much as 51 Canadian cents higher on Friday morning but gave up about half its gains on Kenney's remarks. At 11:30 a.m. EST (1630 GMT), they were up 26 cents at C$23.52 in Toronto. When Ottawa decides on CNOOC and the broader foreign investment policy, it is also expected to decide on a C$5.2 billion ($5.3 billion) bid by Malaysia's Petronas for Progress Resources Energy Corp. Its shares were up 27 cents at C$19.80. CNOOC has offered $27.50 a share for Nexen. The Petronas offer price for Progress is C$22 a share. Link this Share this Digg this Email Reprints

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