The federal government will not release commitments made by two state-owned enterprises to win approval of their oil industry takeovers, citing Investment Canada Act provisions that protect the commercial interests of foreign investors.
In the House of Commons on Monday, the government came under fire for failing to clarify the act’s “net benefit test” and for failing to force companies to reveal what promises they have made and how well they meet their commitments.
Industry Minister Christian Paradis said it is up to the companies to release their commitments. CNOOC Ltd. has listed in broad terms the undertakings it made to win approval for its takeover of Nexen Inc., while Petronas says its undertakings on the Progress Energy Resources Corp. deal will remain confidential to protect its competitive interests. CNOOC has also agreed to report to Industry Canada on an annual basis on how well it is meeting its commitments, though that report will not be released to the public.
“According to the law I’m not allowed to communicate these undertakings” whether the companies consent or not, Mr. Paradis said in an interview. “Of course, the companies are free to communicate these undertakings or not. But I can tell Canadians that the undertakings that they provided are significant in terms of governance, transparency and disclosure.”
In a release on the weekend, CNOOC listed the commitments it has made to Investment Canada.
They include establishing Calgary as its head office for North and Central American operations; seeking to retain Nexen’s current management; listing its shares on the Toronto Stock Exchange; investing “significant capital” over the long term in Canadian oil and gas projects, and maintaining Nexen’s corporate social responsibility. But the company made those broad promises in July when it announced the deal, and will provide no details on its exact undertakings.
Sources close to the negotiations said Ottawa extracted additional promises from CNOOC over the months of the Investment Canada review, but neither the company nor the government will say what they were.
Petronas was even more vague. The company – which was turned down in October and invited to reapply – issued a release on Monday welcoming Ottawa’s decision. But it made no reference to specific undertakings. Instead the company focused on its plan to develop Progress’s resources in the Montney shale gas fields and to build a liquefied natural gas terminal in Prince Rupert, B.C., in order to export gas to premium-price markets in Asia.
“These components will create thousands of well-paid jobs during construction of the facility and pipeline, as well as permanent, ongoing operating jobs throughout our LNG business, from the Montney region to the West Coast,” Petronas chief executive Tan Sri Dato’ Shamsul Azhar Abbas, said in the release. The company did not mention any plan to list its shares in Canada, though sources say it has committed to make best efforts to do so.
Mr. Paradis defended the confidential nature of the promises.
“When there are undertakings and negotiations, there is obviously some sensitive commercial information that is exchanged between the government and the investors, and the idea is to have good undertakings but on the other hand the investors don’t want to have all of this information public because it could impact their profitability.”