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Canada should think twice about CNOOC's bid for Nexen

Alberta wants to sell oil to China. Ottawa needs to reconsider the takeover, argues Shaun Polczer, Petroleum Economist's North America editor, claiming that an inflated bid for lacklustre assets is not a sound basis for a good relationship

Under Canadian law, China National Offshore Petroleum Corporation’s (CNOOC) proposed $15.1 billion ($15.4bn) takeover of Nexen must pass a net benefit test to determine whether it is in Canada’s public interest. There are plenty of reasons to expect the deal will go through. Most of Nexen’s operations lie outside Canada: in the UK North Sea, the Gulf of Mexico and Africa. Those in Canada account for a quarter of Nexen’s portfolio and are not considered vital national interests. Throwing Nexen to the wind is a small price to pay to cultivate a closer trading relationship with China to offset Canada’s overwhelming reliance on the US, which buys about 99% of the country’s oil and gas exports

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