Harper’s new ownership guidelines won’t stop Chinese from exerting control in Alberta’s oil sands, according to new AFL report

CALGARY – Albertans concerned about the future of the oil sands should not be reassured by new guidelines for state-owned enterprises (SOEs) unveiled by Prime Minister Stephen Harper late Friday afternoon.

A new report prepared by the Alberta Federation of Labour entitled “China’s Gas Tank” shows that the Chinese have a plan for the oil sands – a plan that is not in the long-term best interests of the citizens of Alberta who are the real owners of the resource.

“Now that they own Nexen, the Chinese government will have control over the marketing of about 300,000 barrels of bitumen a day and they will increase their control of Syncrude, Canada’s largest oil sands producer, which will now have representatives from Sinopec and CNOOC on its board wielding veto power,” AFL president Gil McGowan said.

“The Chinese government doesn’t need majority ownership of the oil sands to exert a significant degree of control. It’s already happening. And if more isn’t done to protect the interests of Canadians, we can kiss goodbye to our hopes and dreams about moving up the value ladder.”

The AFL report is based on new documents and testimony about Chinese ownership released as part of the ongoing regulatory hearings into the proposed Northern Gateway Pipeline, as well as documents that CNOOC and Sinopec have been required to file with the U.S. Security Exchange Commission (SEC).

The report makes a number of significant revelations about the Chinese government’s practices and intentions, including the following:

• The Chinese are attracted to the oil sands because they want access to cheap feedstock for their refineries. Specifically, they want to lock in an alternative to high-priced oil from Saudi Arabia. As a result, selling to Chinese SOEs won’t result in an “Asia Premium” for Alberta producers: China wants to pay less, not more.

• Nexen will help China reach its goals because the company’s marketing arm handles about 300,000 barrels of bitumen a day. Nexen’s marketing expertise is currently used to get the best (i.e. highest) prices for shareholders. But it could easily be used to get the lowest prices for Chinese refiners – and that means downward pressure on bitumen prices for Canadian producers and the Alberta public.

• CNOOC in their own words in their April 2012 filing to the SEC: “We sell a significant proportion of our production to CNOOC-affiliated companies Sinopec and PetroChina.”

• The Nexen deal means the Chinese will strengthen their influence over Syncrude, Canada’s largest oil sands producer. Sinopec already owns nine per cent of the company and they have used their stake to veto any new Canadian upgrading projects. Nexen owns seven per cent of Syncrude, meaning that the Chinese government’s stake in the company will now increase to 16 per cent.

•  Rumors continue to swirl that the Chinese intend to buy significant stakes in Canadian Oilsands Ltd., which owns 36 per cent of Syncrude. If this happens, China could move from a position of significant influence to one of outright control at Canada’s largest oil sands producer.

• The Chinese also have what is likely a controlling interest in the proposed Northern Gateway Pipeline. The project has ten funding partners, only six of which have been named publicly. The publicly-named partners include: Sinopec; Nexen (now owned by CNOOC); MEG (owned 15 per cent by CNOOC); Total E & P Canada (in joint venture partnership with Sinopec); Suncor (in joint venture partnership with Teck Resources, which is 17 per cent owned by state-owned China Investment Corporation); Cenovus.

“What’s happening here is an elegant plan to gain control of all steps in the oil sands production chain: from extraction to marketing to transportation,” McGowan said. “Once that’s done, the Chinese will be able to keep prices low and keep the raw bitumen flowing to refineries in China. This will mean lower profits for Albertans who own the resource, lower royalties for Canadian governments and the loss of thousands of potential Canadian jobs in upgrading.”

McGowan says that stopping the CNOOC takeover of Nexen would have been one tool to protect the interests of Canadians. But now that the Harper Conservatives have dropped that ball, he says it’s even more important to stop the Canada-China investment treaty (FIPA) and the Northern Gateway pipeline.

“Northern Gateway would provide the plumbing to drain profits and jobs from Alberta and FIPA would tie the hands of future governments who might want to change the rules,” McGowan said.

“At the end of the day it’s clear that China’s interests are at odds with Canada’s interests. It’s also clear that we can’t rely on the so-called free-market companies to save the day, because they’re all in bed with the Chinese. What we need is a government that’s willing to step in and impose a national energy strategy that puts the interests of Canadians ahead of the interests of foreign governments and profit-seeking corporations that focus only on their short-run self interest.”

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MEDIA CONTACT:

Gil McGowan, President, Alberta Federation of Labour at 780-218-9888 (cell)
Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].

Harper’s new ownership guidelines won’t stop Chinese from exerting control in Alberta’s oil sands,
according to new AFL report

CALGARY – Albertans concerned about the future of the oil sands should not be reassured by new guidelines for state-owned enterprises (SOEs) unveiled by Prime Minister Stephen Harper late Friday afternoon.

A new report prepared by the Alberta Federation of Labour entitled “China’s Gas Tank” shows that the Chinese have a plan for the oil sands – a plan that is not in the long-term best interests of the citizens of Alberta who are the real owners of the resource.

“Now that they own Nexen, the Chinese government will have control over the marketing of about 300,000 barrels of bitumen a day and they will increase their control of Syncrude, Canada’s largest oil sands producer, which will now have representatives from Sinopec and CNOOC on its board wielding veto power,” says AFL president Gil McGowan.

AFL president Gil McGowan will be available for media at the Canadian Council of Chief Executives conference in Calgary at the Palliser Hotel.

Where:
Outside the Alberta Ballroom
Palliser Hotel Calgary
133 - 9th Ave. SW, Calgary

Monday, Dec. 10, 12:30 p.m.

Who:
Gil McGowan, President, Alberta Federation of Labour (780) 218-9888

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China’s Gas Tank

Three Steps Toward Selling Out Canadian Energy Security

December 17, 2012

Chinese-Canadian business relations are being redefined, as we cede decision-making power about our natural resources to state-owned foreign businesses. These businesses are not bound by market pressures and will not act in the best interests of Canadians.

The economic relationship between Canada and China is being redefined.

Over the past year, three major events have dominated the headlines on Canadian business pages. These stories are each part of a larger picture in which Canada’s national interests are being subverted, and the country’s strategic energy assets are being taken over. From exploration and production to transportation and marketing, control of the oil sands is being ceded to state-owned foreign companies.

The China National Offshore Oil Corporation (CNOOC) takeover of Nexen gives a Chinese state-owned oil company marketing control over several hundred thousand barrels per day of oil sands bitumen. Marketing control gives CNOOC power over the price – which means we are handing over control of Alberta’s most important source of royalty revenue to a state-owned enterprise.

At the behest of funding partners that are backed by Chinese state-owned oil companies, the Northern Gateway Pipeline locks in a future where Alberta’s resources leave the country in their rawest form possible. This will ship good paying jobs to China.

“Harper is saying what Canadians want to hear while doing what they don’t want” - AFL president

Edmonton – Prime Minister Harper’s supposedly “tough new conditions” for foreign takeovers are nothing more than a public relations ploy aimed at masking the fact that he has just allowed a foreign government to seize unprecedented control over Canada’s energy resources.

In an announcement late Friday, Dec. 7, Prime Minister Stephen Harper green-lit Chinese oil giant CNOOC’s $15-billion takeover of Alberta-based Nexen, but claimed that new conditions would prevent such deals in the future. 

“The Conservatives are spinning this as a ‘sweeping overhaul’ of foreign investment rules,” McGowan said.“The new ‘guidelines’ for foreign takeover decisions will still see the process take place behind closed doors and be conducted by the Industry Minister.”

“The ‘new process’ Harper has proposed is the same as the old process, which just brought us the largest foreign oil patch takeover in Canadian history,” McGowan said. “They’re saying what Canadians want to hear, but doing exactly what Canadians don’t want. It’s the Republican Tea-Party playbook: tell a bald-faced lie, and hope no one questions you.”

Under the new conditions proposed, the federal government will weigh how much influence state-owned foreign takeovers will have over their acquisitions and an industry, and how much control over Canadian resources this will give the foreign government. Regulators will examine this in private, behind closed doors, and with no public input required.

 “How do you measure this influence? What is the measurement on which this will be evaluated? These are meaningless rules – it’s just a smokescreen,” McGowan said. “Sinopec only has a nine per cent stake in Syncrude…but they used that nine per cent stake to veto upgrading projects. Is there a measurement of how bad that is for Canada?”

The proposed CNOOC takeover has been criticized by Canadians across a broad political spectrum, including Preston Manning, the New Democratic Party and the Communications Energy and Paperworker’s Union.

“CNOOC is not your typical oil company. It doesn’t operate on market principles, and it isn’t beholden to investors. If they had been serious about defending the interest of Canadians, they would have nixed the deal outright,” McGowan said. “They had a good pretext already – Harper’s 2006 campaign pledge ‘not to export more raw bitumen to countries with laxer carbon standards than North America’s.’ If they had cared about state-owned foreign ownership, they would have scuttled this deal.”

The AFL will release a comprehensive report on China’s involvement in Alberta’s Oil Sands on Monday in Calgary.

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MEDIA CONTACT:

Gil McGowan, President, Alberta Federation of Labour at 780-218-9888 (cell)
Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].

The Occupy Calgary Movement has been legally evicted by the city. Whether the justification of the verdict is the invalidity of the protesters' cause, the cleanliness and accessibility of Olympic Plaza, or the safety and health of the protesters, the majority of Calgarians are pleased with this outcome.

Perhaps that is the wrong perspective to take.

It is important to note that protests are not intended to win friends; they are intended to be inconvenient. People forget that out of everyone inconvenienced, it is the protesters that suffer this the most. This small group of people stood up for what they believed in, and they continued to stand in spite of public ridicule, police pressure, legal repercussions, and winter weather. How many people reading this have ever displayed that strength of will?

We forget - and many of us never knew - that these protesters were standing for something that is much bigger than Calgary. Due to the high standard of living and low unemployment rate, locally the Occupy Calgary cause was lost before it even started.

But this never had anything to do with Calgary.

The Occupy Movement is first and foremost a global movement, and every Canadian must recognize that we are damn lucky that we are not living elsewhere. If you've ever spent a substantial amount of time in South America, Eastern Europe, Asia, or Africa - basically the majority of the world - you know exactly what I'm referring to.

Most importantly, the occupiers of Olympic Plaza were protesting the corruption and inequality that currently plagues this world. Each day that the protest was set up was a day that Calgarians were forced to think about events happening outside of their borders. With how quickly the world forgot about Haiti, I would say reminders are important. It's easy to forget when we live in such a prosperous city, but this is a human issue that should be on everyone's radar.

I find it remarkable that Canadian Occupations popped up by choice, not by necessity. Those protesters were not starving. They had access to clean drinking water. They had access to shelter. Most had jobs. They were educated. So why protest? Considering the following facts - one in seven humans do not have enough food, one in four people live without electricity, one in two children live in poverty - and the choice between "that's just the way it is" and "that is unacceptable, this can't continue" is all too easy for many of us. It may not mean much to Calgarians, but having Occupy Movements sustained in Canada, regardless of size and local popularity, is inspirational to those people protesting in parts of the world where the cause is not lost, such as New York and Cairo.

Calgary has shut down a small but persistent thorn in its side. It didn't like that tiny, prickly reminder of the discord occurring in the global community. Now Calgary can return to its bubble, insulated by the oil and gas industry, and there is at least one Calgarian who is saddened by this.

Cale Klesko