OTTAWA: Canada has lost credibility as an investment destination because of its inability to build export infrastructure, a recently retired senior executive at China’s CNOOC Ltd., one of the country’s top three oil and gas companies, said Tuesday.
After spending $35 billion in Canada’s energy industry when oil and asset prices were high, Chinese energy companies are reeling from the oil crash and cutting jobs and investment. China Investment Corp., the country’s sovereign wealth fund, shut down its Toronto office last month.
Their inability to export products due to Canada’s slow regulatory approval process has made a bad situation worse, said Beijing-based Weidong Chen, the former chief researcher at CNOOC and now an advisor to the company.
“Canada is good on the legal, commercial, political stability (levels) and also technology,” Chen said on the sidelines of the Canada-China Forum. “But it’s slow, the infrastructure go slow,” he said, referring Canada’s failure to deliver proposed oil export pipelines, or any of the 20 or so liquefied natural gas (LNG) projects, in British Columbia. Canadian oil and gas is discounted because it can’t reach markets outside the U.S., which is saturated with its own production.
CNOOC, which became China’s biggest spender in Canada with the 2009 acquisition of oil and gas producer Nexen Inc. for $15.1-billion, has proposed to build the Aurora LNG project near Prince Rupert, B.C., but Chen is not optimistic it will get off the ground any time soon.
“The federal government (in Canada) is a weak government, not like China in comparison,” he said. “Most resources are located only in Alberta … and Alberta is an inland state, they can only transport to the U.S. You go to Pacific, you have to negotiate with B.C. and B.C. has a lot of First Nations. I participated in three (annual LNG) conferences. They continuously talk about First Nations issues. I didn’t see any progress.”
While competition for energy markets is intensifying from Russia, Australia, and now even Iran, in Canada “you just go according to your own pace,” said Chen.
The comments come as Canada’s Prime Minister, Justin Trudeau, hopes to rebrand Canada as more than a petro-state and to invite new investment this week in Davos, where the world’s business and political elites are meeting for the World Economic Forum.
Chinese companies were also invited by the federal and various provincial governments to invest in Canada, when its energy abundance was the flavor of the day. Chen said there is regret in some Chinese quarters about the Canadian investment spree and it’s unlikely to be repeated.
