Canada opens a pipeline to China
Facing a Monday deadline, the government announced late Friday that the $15 billion bid the China National Offshore Oil Corp., or CNOOC Ltd. CEO +0.73% , made in July for Calgary-based Nexen Inc. CA:NXY -6.35% NXY -6.56% provides a “net benefit” for Canada.
It also approved a $5.2 billion takeover of Progress Energy Resources Corp. CA:PRQ -4.35% by Petronas, Malaysia’s national oil company. See: Canada OK's CNOOC-Nexen, Petronas-Progress bids.
How the government reached its decision is a bit of a mystery. Just a month ago it looked like national security concerns would scuttle the Petronas-Progress deal, which in turn cast a very dark cloud over the CNOOC-Nexen takeover.
Those betting correctly that the CNOOC-Nexen deal would go through — and the 99% of Nexen shareholders who voted for it — can now say with real conviction what they thought all along: Canada needs an new outlet for its surplus oil and gas.
Earlier this year the Obama administration rejected that part of the Keystone Pipeline project that would have carried oil from Canada to refineries along the Gulf of Mexico, essentially keeping output from Canada’s new oil shale fields bottled up north of the border.
The White House didn’t exactly kill the Keystone project, it just asked that it be revised to address environmental concerns.
There’s another way of looking at this cold shoulder from Uncle Sam. The U.S. has made huge production gains from its own oil shale boom, and that’s taken any urgency out of securing new imports from longtime supplier Canada.
Well, we have no need for Canadian natural gas but we should welcome their oil. As I understand it, part of the green Keystone fantasy was that if the US wouldn't take the shale oil from the Keystone pipeline, no one else would either. Dum de dum dum.
But let's find the silver lining - binding China a bit more tightly to North American energy resources may prompt China to be a bit more pacific in the Pacific.