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Chinese bid for Nexen 'politically unthinkable' five years ago: Rubin

The $15 billion bid by a Chinese state-owned company to acquire Nexen, a major oil sands producer, indicates just how far Canada's economic priorities have shifted, argues acclaimed energy thinker Jeff Rubin.

"As the Nexen deal shows," Rubin writes, "Calgary’s economic compass, which used to point south to Houston, is now being drawn east to Beijing."

His analysis comes after news broke Monday that CNOOC Ltd., China's largest offshore oil producer, had announced a "blockbuster deal" to acquire Nexen, a prominent, though struggling, Canadian oil sands producer.

If approved, the takeover deal would be the sixth-largest in Canada's history.

"Only four or five years ago, the notion that a state-owned Chinese company could buy–lock, stock and barrel of bitumen–one of Canada’s premier oil names was politically unthinkable," Rubin writes. "Today, that’s all changed."

Prime Minister Stephen Harper came to power in 2006 as a staunch critic of China's human rights record.

"Eventually," Toronto Star business columnist David Olive argues, "the economic interests of Harper’s home province [Alberta] dulled his principles on that topic."

Following President Barack Obama's surprise rejection of TransCanada's Keystone XL pipeline last year -- a decision looking more ambiguous each passing month -- Harper has actively pursued Chinese investment in Canada's energy sector.

The Nexen deal, while huge in financial terms, likely poses little threat to Canada's political or economic security, Olive added.

"The players of national strategic importance in Athabasca are Suncor Energy Inc. and Syncrude Canada, followed by Canadian Natural Resources Ltd.," Olive adds. "With market valuations of $48 billion and $32 billion, respectively, Suncor and Canadian Natural Resources are likely safe from takeover."

Many Canadian observers seem to agree, including CIBC analyst Andrew Potter, who argued that these bigger players are "probably off limits" to Chinese takeover.

CNOOC Ltd., also known as the China National Offshore Oil Company, appears to be easing political fears by promising to locate the head office for its North and Central American operations in Calgary.

"Should there not be a massive negative reaction," argued former Canadian diplomat Gordon Houlden, "I think this [takeover] goes through."

Council of Canadians head Maude Barlow, meanwhile, questioned what Canada stands to gain from the deal.

“Are we the Boy Scout of globalization?" she told the Toronto Star. "Canada is the most open country in the world in terms of come on in and buy anything and we won’t set any rules."

Geoff Dembicki reports on energy and climate change issues for The Tyee.

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