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NDP Industry critic Helene LeBlanc and Natural Resources critic Peter Julian hold a news conference in Ottawa Oct. 4, 2012.

Fred Chartrand/The Canadian Press

The federal New Democratic Party formally disapproved of CNOOC Ltd.'s $15.1-billion (U.S.) offer to acquire Calgary's Nexen Inc., aiming to widen opposition to China's plan to secure a major foothold in the oil sands.

Peter Julian, the energy and natural resources critic for the Official Opposition NDP, told a news conference on Thursday that his party does not have confidence in the Conservative government's ability to handle the deal transparently.

The government is reviewing the foreign takeover and must determine whether it has a "net benefit" for Canada. CNOOC is the third-largest state-controlled energy company in China, and critics worry Canada is at risk of losing control of important natural resources to foreign governments.

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The NDP's opposition to the Nexen takeover puts the federal government in a politically sticky spot. Prime Minister Stephen Harper wants the oil sands industry to continue to flourish, which requires billions of dollars in foreign investment. But some Canadians, including politicians within his own caucus, are leery about China's expanding oil sands ownership and uncomfortable with the restrictions Beijing places upon other counties which want to do business in China.

The Canadian government has never fully revealed what it takes to pass the "net benefit" test, and the NDP's stance may force Mr. Harper to be more specific. With the NDP speaking out, the debate over Nexen's future – and other Canadian takeover targets – is now mainstream, rather than isolated to the business world.

"Now it is burst wide open onto the political scene," and becoming "a kitchen table national debate," said Penny Collenette, a law professor at the University of Ottawa, as well as a former senior director in the Prime Minister's Office under Jean Chrétien and a former vice-president at George Weston Ltd.

New Democrats "cannot support the rubber-stamping of the CNOOC takeover of Nexen," Mr. Julian said. "We cannot see the net benefit when we look at a variety of concerns and criteria that have been raised by the Canadian public." Those concerns, he said, included the environmental and human-rights record of CNOOC, the potential for job losses and the risk of decision-making gravitating away from Nexen's Calgary head office, plus risks to national security.

CNOOC has been seen as a "strategic arm" of the Chinese government, Mr. Julian said, pointing to a particularly controversial aspect of the proposed deal. CNOOC, for its part, insists it operates as an independent company. And "the idea that this government would enforce conditions is simply a smoke screen," Mr. Julian said.

"Every single takeover that has been rubber-stamped by this government, regardless of whether the companies have maintained their commitments or not, the government has never responded to enforce those conditions."

Mr. Harper said the NDP is merely adhering to its socialist ideological bent and its rejection of the transaction would not affect the government.

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"We do have to remember as Canadians that a lot of jobs in this country, a lot of jobs and growth, depend on investments. As well, Canada is a significant investor in other parts of the world," Mr. Harper said. "So our economy depends on the kind of jobs and growth that international investment flows create."

The Conservative government has been generally welcoming of foreign investment, he said, but it has also significantly modified and blocked some transactions.

"This particular transaction raises a range of difficult policy questions, difficult forward-looking issues," Mr. Harper said. "And those things will all be taken into account under the [Investment Canada] Act in assessing the net benefit of this investment to this country before we take a decision."

Industry Minister Christian Paradis slammed the NDP for speaking out against the CNOOC-Nexen deal.

"The true motivations for the NDP's actions are clear; frighten off investment and shut down trade. This is not surprising coming from the party that opposed free trade with the United States, our largest trading partner," he said in a statement. "The NDP's actions are reckless and irresponsible. By attempting to politicize the review process they are creating the kind of uncertainty that scares off the investment Canadian companies rely on to create jobs, innovate and compete."

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About the Authors
Parliamentary reporter

Gloria Galloway has been a journalist for almost 30 years. She worked at the Windsor Star, the Hamilton Spectator, the National Post, the Canadian Press and a number of small newspapers before being hired by The Globe and Mail as deputy national editor in 2001. Gloria returned to reporting two years later and joined the Ottawa bureau in 2004. More

Carrie Tait joined the Globe in January, 2011, mainly reporting on energy from the Calgary bureau. Previously, she spent six years working for the National Post in both Calgary and Toronto. She has a master’s degree in journalism from the University of Western Ontario and a bachelor’s degree in political studies from the University of Saskatchewan. More

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