CNOOC answers the question: 'What's next?' (3)

With a population of slightly more than 1 million, Calgary, situated on Bow River in the south of Alberta, has had many foreign investments in oil and gas projects in particular.

In 2011, Beijing-based Sinopec (China Petroleum and Chemical Corp) bought Calgary-based Daylight Energy Ltd for $2.2 billion. Last year, PetroChina became the first Chinese State-owned firm to wholly own Calgary-based Athabasca Oil Sands Corp for $674 million.

Recently, Sunshine Oilsands Ltd signed an agreement with China Oilfield Services Ltd for cooperation in developing multiple thermal fluid oil-sands exploration technology in Canada.

John Zahary, president and CEO of Calgary-based Sunshine Oilsands, the first Canadian oil-sands listing on the Hong Kong Stock Exchange, said while the CNOOC acquisition of Nexen is big, "it hasn't completely changed things".

"A significant majority of Nexen's assets are outside Canada despite the fact that Nexen is headquartered in Canada," he said. "Thus, the deal doesn't even have as much impact on Canadian oil industry as some smaller deals where the assets are in Canada."

From his office window, Zahary can see Nexen headquarters. After some recent exchanges with CNOOC executives at a local event, he described his new neighbor as "very friendly and eager to be part of the community".

Most of the Chinese investment has come from State-owned enterprises into Canada's natural resource projects, and it has drawn scrutiny and criticism from members of the governing Conservative Party and local environmentalists.

The CNOOC-Nexen deal took about five months for the government of Prime Minister Stephen Harper to review before approving it in December. While recognizing the importance of foreign investment in the country's economy, Harper described the decision as "not the beginning of a trend, but rather the end of a trend".

Some see the deal as a boost for Sino-Canada economic ties.

"The Canadian government approval is significant in that it shows an understanding of the importance of being able to attract capital has in the industry," said Zahary of Sunshine Oilsands.

Peter Harder, president of the Canada China Business Council, which focuses on facilitating bilateral trade and investment, said CNOOC's investment signals the "maturing" of the relationship of the two countries. "This transaction demonstrates a high level of bilateral economic cooperation and speaks to the important role of foreign investment in Canada's energy strategy and the development of Alberta's oil sands," said Harder.

The examination of the acquisition by CFIUS, the US committee that reviews sensitive deals by foreign investors, had sparked speculation among industry experts of a possible denial, but the committee approved it last month.

Many related it to CNOOC's failed attempt for an $18.5 billion bid for California-based energy firm Unocal Corp.

"CFIUS views every transaction separately from a national security perspective and it would not be reasonable to extrapolate from this clearance that another attempt by CNOOC to acquire Unocal (which failed in 2005) would now be approved," said Carl Valenstein, a Washington-based partner with the law firm Bingham McCutchen LLP.

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