Canadian Prime Minister Stephen Harper found a new source of investment for Canada’s energy industry in Malaysian state-owned energy giant Petronas Dagangan (Otcmkts:Pnadf), but it may get serious pushback from the opposition party over environmental concerns.
The $34.94 billion investment in a liquefied natural gas (LNG) plant and a pipeline to feed it is said to be the nation's biggest foreign investment, the Canadian Press said Sunday.
“This is a very significant landmark decision by Petronas,” Najib Razak, the Malaysian prime minister, said. “It is done in the wake of the friendly relations we have and the positive response we received from the Canadian government in respect to Petronas’ involvement in Canada … We have a very high level of confidence that this investment will be supported by the Canadian government today and in the future.”
Canadian opposition leader Thomas Mulcair, of the New Democratic Party (NDP), said that any such investment has to go through an environment assessment, which has become lax under Harper’s Conservative party. “If you don't have a social license, nothing is going to get built," Mulcair said.
The move comes as Canada is becoming more cautious with state-owned foreign investment in its oil industry as foreign countries may not have Canada’s best interest at heart.
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Recently, Harper signed new laws that would require the review of any investment by a foreign state-controlled company that’s greater than $344 million in asset value. Harper wants to make sure that foreign state-owned companies’ control of oil sands will benefit Canada, not just the companies' bottom-line interests. The prime minister does not want foreign state-owned companies to gain too much power and influence over the world’s third-largest reserves of oil.
The nation's caution about investments by foreign state-owned enterprises emerged last year when Ottawa approved a takeover of Calgary-based oil producer Nexen Inc. (TSE:NXY) by China-owned energy giant Cnooc Limited (HKG:0883).
Foreign investment, however, is crucial for Canada as it accounts for one-quarter of all the capital injected into Canadian energy projects. Without foreign investment -- whether from state-owned or private entities -- expansion in the energy sector will likely slow.
“This is something that has greater attention than ever before, and we want to make sure that any decision is given the weight and consideration that it’s due and the department is allocating the resources and talent to these kinds of decisions,” James Moore, Canada’s industry minister, said in an interview with Bloomberg.