PetroChina and the Oil Sands

3 09 2009

The Canadian media has generated a host of stories related to PetroChina’s purchase of a large stake in the Alberta oil sands. See here, here, and here. The Calgary Herald is advocating that the federal government block the sale. The Economist has coverage here. Some of the discussion revolves around whether the federal government will allow PetroChina, a state-owned company, to complete the purchase. The existing legislation governing foreign takeovers of Canadian companies is nebulous on the subject of state-owned enterprises. Interesting, the deal has been opposed by some Americans, who object to the Chinese acquiring energy resources in America’s “backyard”. (Apparently, these people believe that the United States has some sort of prior claim on Canada’s resources).

I’m interested by the possibility that this controversy might be the beginning of a contest between two economic giants, the United States and China, for Canada’s resources. For decades, Canada has been firmly in the economic orbit of the United States. I would welcome such competition for Canada’s energy. First, from a strictly economic point of view, it is better to have multiple parties bidding for one’s assets. Second, from a political point of view, I think that it is important to have a force in Canada that can counter-balance the overwhelming influence of the United States. One of the broad lessons of Canadian history, in my opinion, is Canada is most likely to maintain its autonomy vis-à-vis its superpower neighbour by associating itself with powerful nations off the continent. In the past, the off-continent partner was the United Kingdom. In the future, it may be China.

There is more about PetroChina here.