as China swooped in to claim a prize the U.S. forfeited? This week, China's state-run energy giant CNOOC announced that it was buying Canadian oil producer Nexen for $15 billion, the largest-ever acquisition by a Chinese company. The deal would give China control over Nexen's oil sands operations in the Canadian province of Alberta (among other Nexen oil properties around the world), a huge win for the energy-hungry nation. The purchase still needs to be approved by Canada's parliament, which has blocked foreign takeovers of domestic businesses in the past. However, analysts say the odds look good, partly because oil-rich Canada has been forced to turn to other investors after President Obama suspended the Keystone Pipeline, a massive project that would have delivered oil from Alberta to the Gulf Coast, over environmental concerns. Did Obama push Canada into China's arms?
Yes. Canada has to sell its oil to someone: When Obama stalled the Keystone Pipeline, "it spurred Canada to look to China as a new partner," says Nathan Vardi at Forbes, and now "Canada's vital oil industry appears to be drifting to China." Canadian Prime Minister Stephen Harper responded to Obama's "snub" by immediately "heading to China to start negotiating energy deals." If Canada continues "to diversify its economic dependence away from the U.S.," it could be a "strategic setback for the U.S., which has been searching for years for secure sources of oil that are free from the political uncertainty that exists in Venezuela and the Middle East."
"CNOOC's Nexen deal shows how Obama pushed Canada toward China"
And Obama's environmental objections are now moot: "The lesson for America, and especially Democrats, is that Canada's oil sands will be [further] developed," despite objections over the environmental impact, says The Wall Street Journal in an editorial. "If the U.S. doesn't want the oil, China and the rest of Asia will gladly take it." China is trying to "replace the U.S. as Canada's biggest energy investor and market," and Obama is letting it happen over the most meaningless of objections.
"China's Canadian energy play"
Let's not get carried away. Nexen's Canadian presence is small: While CNOOC will win a stake in the Alberta oil sands, Nexen's holdings in Canada are relatively small, say Lee Chyen Yee and Jeffrey Jones at Reuters. Canadian lawmakers are hardly enthusiastic about having their natural resources owned by communist China, but "most of Nexen's assets lie outside Canada, making it less likely that it would be seen as a national champion falling into Chinese hands." The deal is unlikely to spark a wave of Chinese acquisitions in the U.S.'s backyard, and the U.S. still enjoys a healthy advantage in its trade relations with Canada.
"China's CNOOC scoped Nexen, partnered, then pounced"
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