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 (OGJ Online, Feb. 26, 2013).
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."
The government also changed the review threshold for net economic benefits under the Investment Canada Act. The threshold is to increase in steps to $1 billion except for investment by state-owned enterprises. The net-benefit threshold this year is $344 million.