OTTAWA -- First China, then British Columbia.
Two major developments on Monday are putting the centrepiece of Stephen Harper's much-vaunted economic strategy to the test.
Harper has moved aggressively to put natural resource exploitation at the forefront of his government policy, aiming to ensure Canada's future as an energy superpower.
But Monday's massive $15-billion takeover bid for Calgary's Nexen Inc. by the state-owned China National Offshore Oil Company will force Harper's hand, making him decide how much say foreign interests can have on how Canadian energy is developed.
And statements from British Columbia's government -- laying out new conditions for the Northern Gateway pipeline to carry Alberta bitumen to the West Coast -- add more uncertainty to the future of the controversial pipeline.
The pipeline has been a key part of Harper's strategy to diversify Canada's trade and ship more oil to Asia.
Both developments raise pointed questions about who gets the spoils of natural resource development, and who shoulders the risks.
Observers of all stripes say the sands are shifting so rapidly, it's now time for Canadian political leaders to hash out a coherent plan on how the country's energy bounty should be dealt with in the interest of all of Canada.
"It's really important for Canada as a whole," said University of Calgary economist Jack Mintz. "It's important we get our thinking straight, to make sure we do it for the benefit of all Canadians."
Environmentalist Gillian McEachern said she hopes to see that kind of direction coming later this week from the premiers when they meet in Halifax and discuss a national energy strategy.
"Canadians need to come together to decide what's in our best interest, and what kind of energy future we want," McEachern said.
CNOOC's $15-billion proposed all-cash takeover of Nexen was a friendly bid, offering shareholders a generous 60-per-cent premium on their holdings.
The real test will be at the political level. The deal requires approval from federal Industry Minister Christian Paradis, who will need to determine under the Investment Canada Act whether the transaction is of net benefit for Canada.
His review will take an initial 45 days, and can be extended by 30 days or more.
As is standard, the Competition Bureau will also require a review to see if the transaction would dramatically reduce competition. That review will take an initial 30 days, and can be extended if the bureau requests more information.
But for the opposition NDP, those reviews fall far short. Natural resources critic Peter Julian said he wants a full public review, through a House of Commons committee, to discuss whether the takeover would benefit the country.
Julian also wants Paradis to come forward with the more transparent rules on foreign investment, promised two years ago in the wake of the government's "secretive" rejection of the takeover bid for Potash Corp. by Australia's BHP Billiton.
A combination of public hearings and more transparent investment review procedures would reveal whether the Nexen deal is truly good for the Canadian economy, the environment and communities, Julian said.
"The ultimate question here is, are we selling all of our resources to foreign investors, and are they being put to the best use for the best value," said Reynold Tetzlaff, the Canadian energy leader for PricewaterhouseCoopers LLP in Calgary.
The growing Asian involvement in the oilpatch raises the stakes for the building of a pipeline to the West Coast, he added, because the foreign investment assumes Canada will build a pipeline one way or another.
Harper's decision on Nexen and the way he handles the Northern Gateway pipeline in the face of political friction will show the world in great detail how much Ottawa is willing to do to attract foreign investment and pin its future on oil product, Tetzlaff said.
"Just how open are we to foreign investment?"
CNOOC seems fully aware of political state of play. The high bid -- coupled with CNOOC's promise to keep Nexen's Canadian management in place -- are clear reflections of the political stakes, Mintz said.
The companies provided Ottawa with a heads-up before the offer was announced, Nexen chief executive Kevin Reinhart told a conference call.
"There was some work in preparing for conversations with the government; initial phone calls were made to them, but it is premature to talk about any of the reaction," Reinhart said.
"We will work together to file the necessary applications and to work with the various governments to make sure that they have all of the information they need to make the right decision."
The premiers are meeting in Halifax this week, and hope to tackle these very subjects as they forge ahead with a national energy strategy.
Led by Alberta Premier Alison Redford, the premiers hope to craft a joint plan to develop and market a range of natural resources -- not just oil and gas, but also hydro-electric power and other resources -- in a way that is sustainable and protects the environment.
But they have been talking about such a plan for years, and observers say it's unlikely they can nail down anything beyond a set of common principles.
"If you try to take a pan-Canadian approach, it just goes on and on and on" since the provinces have vastly different self-interests, Mintz said.
Saying no to the Nexen takeover would have major repercussions for Canada's reputation as an open economy, and could well scare off China and its ample supply of investment, he added.
But at least one expert expects Ottawa to give CNOOC a green light.
Political scientist Wenran Jiang said the relationship between the Canadian government and China has been warming in recent years, and that Alberta has shown an openness to foreign investment, too.
"The reality is that the Chinese money is not that threatening," Jiang said.
Comparisons to the rejection of the Potash deal are unfounded, he added. Nexen's board has unanimously approved the deal and shareholders will likely be happy with the offer; the $US40-billion BHP offer, on the other hand, was a hostile bid.
Nexen also represents a small fraction of Alberta's oilsands industry. Potash Corp. is one of the world's biggest producers of the crop nutrient for which the company is named and Saskatchewan relies on it heavily for employment and tax revenue.
"I expect huge debates, but I would expect this to be approved and I think it should be approved," Jiang said.
"It's good for Canada. It's good for bilateral energy co-operation. Let's move that to the next level."
