Did Obama push Canada into China's arms by rejecting the Keystone Pipeline?

China is in the process of acquiring a stake in Canada's valuable Alberta oil sands, months after Obama suspended a plan to invest in the region

President Obama and Canadian Prime Minister Stephen Harper during a White House press conference April 2
(Image credit: Alex Wong/Getty Images)

Has 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."

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