PetroChina‘s $1.9 billion majority interest in two undeveloped projects in the Alberta oilsands does not sit entirely well with a group of Canadian CEOs polled recently by COMPAS Inc. Nearly two-thirds of the 116 respondents believe the deal should proceed — but only if certain conditions are imposed to limit the influence of the company in Canada.
When asked about reasons to stall or block the sale, the CEOs indicated concerns about how the Chinese government operates, particularly when it comes to the legal system, which they believe plays favourites. The government’s record on human rights is another problem area, and 67% of the respondents believe a Chinese firm will be more lax when it comes to health and environmental concerns than existing companies. Likewise, 64% of the CEOs said the sale is a national security issue. “Control of non-renewable resources should always remain in Canadian hands,” wrote one respondent.
But the CEOs were still in support of the deal for the most part — only 31% said the government should block it — and saw good sense in allowing it to proceed. The number one reason, according to the respondents, is that it would send a signal to the U.S. government that Alberta has other markets for its resources. “The federal government should formulate a clear and firm policy that establishes free trade in the resource sector, not just free trade that suits the Americans,” according to one CEO. “The U.S. needs to learn that it cannot bite the hand that feeds them without consequences.”
The oilsands could also use the cash infusion, according to many respondents. “The oilsands are an expensive venture requiring large amounts of investment,” wrote one CEO. “While all investments require scrutinizing, the oil sands also create economic stimulus [and] outside investment provides new capital as opposed re-circulated capital.”
Another CEO took a long-term view in assessing the country’s interest in the oil patch: “China will eventually become a democratic country.”