“Foreign investors are interested in high-yield investments, liquidity and a secure and stable environment, all of which Canada offers.”
is senior vice president of the Toronto Stock Exchange
Foreign investors are taking a keen interest in Canada’s energy industry, with the most recent example a $15.1-billion takeover bid for Canadian oil company Nexen Inc. by the Chinese state-owned firm CNOOC Ltd.
The bid, which is under review by the federal government, has drawn attention to foreign investment in the sector, and that does not come as any surprise to Ungad Chadda, senior vice-president of the Toronto Stock Exchange.
Mr. Chadda says Canada is viewed as a safe place to invest and conduct business, noting that the country has a strong role in the global energy sector, and is seen as a leader in energy-related technology.
“Foreign investors are interested in high-yield investments, liquidity, and a secure and stable environment, all of which Canada offers,” he says. “Canada is considered a stable country, both politically and economically, and carries less risk than other jurisdictions.”
Mr. Chadda also notes that foreign investors have access to micro- and mid-cap companies in Canada that are not available in other countries.
“They can get in on the ground-level of a growing company,” he says, adding that 40 per cent of daily trading on exchanges with TMX Group, an integrated, multi-asset class exchange group, originates outside of Canada.
“TMX Group’s exchanges are number one in the world, by number of listings in the oil and gas sector,” Mr. Chadda notes. “In addition, the province of Alberta boasts the second-largest oil reserves in the world.”
Natural Resources minister Joe Oliver has said that China is not the only possible source of the investment that Canada needs to develop its oil-rich tar sands and other energy interests.
Mr. Oliver is on record as saying that there has been more investment from the United States than any other country, and cited France, the Netherlands, Japan and Malaysia as other investors.
“We’ve already seen a land rush because Canada offers a stable project environment and engineering expertise capable of developing these resources,” says Geoffrey Cann, national leader of the Energy & Resources consulting practice at Deloitte.
And on top of that, according to the Canadian Association of Petroleum Producers, 80 per cent of world oil reserves are owned or controlled by national governments. Only 20 per cent of total world oil reserves are accessible for private sector investment, of which 55 per cent are in Canada’s oil sands.
One example of foreign investment is the 2011 international partnership involving Total E&P Canada Ltd., a subsidiary of the French company Total SA, and Suncor Energy Inc. They announced plans to develop the Suncor-operated Fort Hills mining project, as well as the Total E&P Canada-operated Joslyn North mining project and the Suncor-operated Voyageur upgrader project, which are all located within the Athabasca region of the Alberta oil sands.
“Through this strategic alliance with Suncor, we are looking forward to developing three of Canada’s leading oil sands projects together,” Jean-Michel Gires, president and CEO of Total E&P Canada, said when the alliance was announced. “The development of Joslyn North, Fort Hills and Voyageur projects offer a strategic position in the Athabasca with a future of strong, sustainable production of Canada’s oil sands.”
Mr. Chadda, who will participate in the ninth annual Calgary Energy Roundtable on October 2, says attendees at the meeting will be reminded that Canada has a top-tier credit rating and number-one ranking in lowest net debt to GDP in the world.
“Canada is also repeatedly judged by the World Economic Forum – an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas – as having the safest, most sound economy in the world,” he adds.
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