“Prime Minister Stephen Harper’s pro-business and pro-energy stance makes both the CNOOC and Petronas deals likely to pass under revised foreign ownership guidelines,” the rating’s agency said in a report.
Canada rejected a $5.2-billion bid by Malaysia’s Petronas Bhd. for Progress Energy Resources in October, but the companies are looking to resubmit the proposal. The government also extended its review of Beijing-based CNOO’s $15.1-billion bid for Calgary-based Nexen.
Finance Minister Jim Flaherty told reporters today it will be “some time yet before decisions are made” by the Canadian government.
Despite the regulatory setbacks and delays, Moody’s expects foreign companies to get a greater foothold in Canada, as the country needs foreign capital to fund oil sands and potential liquefied natural gas (LNG) facilities over the next several years.
“The Canadian government is reviewing its foreign takeover rules in light of the above two (and additional anticipated) acquisitions, and is expected to provide two-tiered guidelines—one for foreign state-controlled entities, and one for foreign non-state controlled entities.”
Revising and clarifying the rule are just one aspect of unlocking the Canadian energy prize.
Canadian LNG projects are also facing delays as developers are unable to secure favourale prices, especially after rival Cheniere Energy on the Gulf Coast agreed to sell LNG to Korea Gas at prices linked to Henry Hub natural gas spot prices, rather than oil prices.
“This has proven to be a roadblock to the Kitimat, B.C. project, a joint venture between Apache, EOG Resources and Encana,” notes Moody’s. “Apache has acknowledged difficulty in obtaining sales contracts from Asian LNG purchasers that have oil-linked prices. Even if such off-take agreements are obtained, it will be at least three to four years before any of the larger B.C. facilities would enter service.”
Original Article
Source: financial post
Author: Yadullah Hussain
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