Shareholders in Calgary-based Nexen Inc. voted overwhelmingly in favour Thursday of a $15.1 billion takeover by Asian energy giant China National Offshore Oil Corp. (CNOOC).
With final approval for the transaction now resting with Ottawa, critics across party lines have questioned whether Canada stands to gain a "net benefit" from the deal, pointing out some potential hidden costs.
Here are a few concerns that have been raised.
1. Does China have ulterior motives?
Although it didn’t name any specific companies, the Canadian Security Intelligence Service released an annual report Thursday warning that foreign-controlled entities investing in Canada could make the nation more vulnerable to espionage.
In the report tabled to Parliament, CSIS expressed concern about "opaque agendas" by some state-owned enterprises that could be using takeovers to launch "foreign interference" activities.
"While the vast majority of foreign investment in Canada is carried out in an open and transparent manner, certain state-owned enterprises (SOEs) and private firms with close ties to their home governments have pursued opaque agendas or received clandestine intelligence support for their pursuits here," the spy agency’s report states.
The national security risks will continue for as long as foreign state-owned companies show an interest in investing in Canada.
There is also the concern about intellectual property theft, said Alberta Conservative MP Rob Anders, noting that Alberta’s oil sands industry has produced innovations in areas such as fracking and drilling techniques, which could be marketed abroad.
2. Does it jeopardize Canadian control of the resource sector?
It’s not just the Nexen deal, but what could come next, CBC’s national affairs editor Chris Hall said on The National.
"There are lots of bigger companies. Companies like Encana, like Canadian Oil Sands and Talisman – big mining and energy companies that could be on the block," he said. "And the Chinese companies have a lot of capital to spend as they look ahead."
The prospect of Chinese control over the Alberta oil sands doesn’t sit well with Rob Anders.
"I think oil is a strategic resource, and I think that we have to have serious reservations about [China’s] involvement in any strategic resource like that," he said.
Discomfort over the idea of a hollowing out of Canada’s energy resources by foreign entities has long been a thorny issue. Industry analysts have said it’s likely the Chinese could pursue Canadian Oil Sands as another takeover target.
CBC’s Greg Weston pointed out that such a deal would effectively give the Chinese government majority control of Syncrude, "a consortium nurtured with billions of Canadian tax dollars and which currently produces the equivalent of 15 per cent of this country's total oil consumption."
3. Will it affect Nexen's existing investments in the community?
Nexen’s charitable initiatives have included local and international funding of projects in support of scholarships and the arts. CBC business columnist Deborah Yedlin, speaking on the CBC Radio show Calgary Eyeopener, said people are questioning whether those contributions would continue if the CNOOC takeover goes ahead.
Among the philanthropic activities listed on its website, Nexen has given $750,000 to the Calgary Drop-In and Rehabilitation Centre for a new affordable-housing complex, and has also committed $1 million to a scholarship program at Mount Royal University and funding research at the University of Alberta and the University of Calgary.
The company has also extended its philanthropy to arts projects and international development in Yemen, Colombia, New Orleans and Nigeria.
4. Should China's human-rights record be a concern?
Business aside, some critics have raised China’s poor human rights and environmental records as reason enough to reject the CNOOC deal.
Anders recently called China "the largest human-rights violator in the world," while reiterating his opposition to the takeover.
Prime Minister Stephen Harper has said it’s important to Canadians that the government stands up for human rights as it pursues strategic partnerships with China.
"In relations between China and Canada, you should expect us to continue to raise issues of fundamental freedoms and human rights," he said in a speech in China in February.