Canada May Be Target for More Investments, Trade Minister Says
Canada still welcomes Chinese investments in its oil and gas sector even though Cheney is trying to talk them out of it. Canada’s oil sands are awesome.
Raymond James Research Report Gushes Over Canada's Oil Sands #msg-7209373
Following China’s Interest, Snow Visits Oil Sands Cheney on the way. #msg-6919441
-Am
Canada May Be Target for More Investments, Trade Minister Says
Aug. 11 (Bloomberg) -- Canadian companies may be targets for more foreign takeovers as surging commodity prices attract oil and natural gas firms such as Total SA and Kinder Morgan Inc., Canada's Trade Minister Jim Peterson said.
``Energy is becoming scarcer and we have abundant energy,' Peterson said in a telephone interview. ``I would not be surprised if people from around the world wanted access to our energy or saw our energy companies as very good investment.'
Record high oil prices are boosting the allure for a country that holds the world's second-largest pool of proven reserves after Saudi Arabia. That's fueling the economy's expansion and sparking a two-month jump in the Canadian dollar.
Kinder Morgan's $3.1 billion purchase of Terasen Inc., a Vancouver-based pipeline and natural gas company, brings the value of foreign takeovers in Canada this year to $17 billion, a 26 percent increase over the same period a year ago and the highest since 2001, according to data compiled by Bloomberg.
Four of the five largest acquisitions this year were oil- related. Houston-based Kinder Morgan, which operates about 35,000 miles of U.S. pipelines, said on Aug. 1 it agreed to buy Terasen, in Canada's biggest foreign acquisition in four years.
Houston-based Weatherford International Ltd., CNOOC Ltd., the third largest Chinese oil producer, China Petrochemical Corp., and France's Total also have made Canadian purchases this year.
Rising oil prices could mean more takeovers are on the way, said Garey Aitken of Calgary-based Bissett Investment Management. Crude oil for September delivery gained 32 cents to $65.22 a barrel today after earlier touching $65.30 a barrel, the highest price since the contract debuted on the New York Mercantile Exchange in 1983. Prices have almost doubled from the end of 2003.
Catalyst
``The kind of commodity price action that we've had can serve as a bit of a catalyst for this kind of activity, and there could be more of that,' said Aitken, who manages the equivalent of $11.9 billion at Bisset, which owns shares of companies including Shell Canada Ltd., Nexen Inc. and Canadian Natural Resources Ltd.
Spending on oil and gas in Canada will grow to C$35 billion this year from C$31 billion in 2004, the Canadian Association of Petroleum Producers estimates. The world's eighth-largest economy will expand at a 3.2 percent annual rate this quarter, the most in a year, according to a Bloomberg survey of economists this week.
Net investment flows, or foreign investments minus spending by Canadian businesses abroad, grew to C$9.4 billion in the first three months of this year, a three-year high, according to Statistics Canada.
Dollar
The flows have given a lift to the Canadian dollar, which has risen almost a third since 2002 against the U.S. currency, said Wojciech Szadurksi, an economist with Global Insight Inc., a consulting company that provides forecasts to Canada's finance ministry.
Energy investments ``are one of the channels in which higher oil prices have a positive impact on the Canadian dollar,' said Szadurksi. ``We expect the Canadian dollar to appreciate by the end of this year and over the next year.'
Peterson said he welcomes investments from abroad, including those from Chinese companies such as Cnooc, which is 71 percent- owned by state-controlled China National Offshore Oil Corp. The Chinese company, which this month dropped a bid to acquire Unocal Corp. because of what it called a hostile political environment in the U.S., paid C$150 million for a 17 percent stake in Canada's MEG Energy Corp in April.
``My role as international trade minister is to encourage foreign investment and I have done that in China,' said Peterson, who traveled to the Asian country last month to promote investment and trade between the two countries.
To contact the reporters on this story: Theo Argitis in Ottawa at targitis@bloomberg.net Last Updated: August 11, 2005 08:38 EDT
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