Nexen: A Prelude to Greater Clarity?

If the average Canadian is left a bit bewildered by the recent debate over the proposed takeover of Nexen by China’s state-owned oil company, CNOOC, they can take solace: so are many experts. While there is generally a consensus that the government’s decision in the matter struck the best political compromise possible — approve the transaction, but keep future investments in the oil sands by foreign state-owned enterprises (SOEs) to an “exceptional” basis — there is wide disagreement about the merits and effects of the larger policy decision.

At the heart of this disagreement is a fundamental confusion about the question(s) under review. Was the government meant to establish the parameters of Canada’s future trade relationship with China? Pass judgement on the strategic impact of investments by SOEs? Maintain control over Canada’s energy resources? Or, more fundamentally, were they supposed to more clearly define the “net benefit” test currently used to assess proposed foreign takeovers?

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