Every time a state-owned oil company buys a Canadian energy producer, a little part of Alberta’s oilpatch dies.
It’s true that Calgary’s head office set, especially the finance and investment banking parts, have been drooling for Petroliam Nasional Bhd (Petronas) and the China National Offshore Oil Corp. (CNOOC) to inject almost $21 billion into the Canada’s capital markets via their planned takeovers of, respectively, Progress Energy Resources Corp. and Nexen Inc.
But I beg to differ. Alberta’s energy sector, among the world’s most open, dynamic and technically advanced, would only be degraded by the arrival of opaque monopolies answerable to undemocratic governments.
Companies such as Petronas are the true “Big Oil.” The world’s 16 largest oil companies are owned by national governments, many of them unsavoury outfits like Iran’s mullahcracy. Petronas is ranked 14th worldwide and is part of the Malaysian state. These state-owned companies are vastly larger than the widely mistrusted “private” Big Oil companies such as ExxonMobil, BP and Shell.
It’s understandable that people who’ve only ever lived in free countries have a hard time envisioning how dogmatic, inert and just plain ineffective state-owned enterprises really are. Having spent time in the Eastern Bloc during the Cold War, I’ve seen such operations first-hand. When it comes to the energy sector, I’m told that state-oilco technical personnel routinely spend decades working on a single oil- or natural gas-bearing horizon. What’s to the side doesn’t interest them — and they’d be barred from doing anything if it did. Vast resources simply remain unnoticed.
That’s why virtually all countries dominated by state oil companies can barely maintain their production — let alone, increase it — without outside help. After more than 80 years of producing oil, why isn’t Saudi Arabia a world centre of know-how and technology, exporting new methods and tools around the world? Instead, it’s barely treading water. In Mexico, production is actually declining. Despite decades of operating experience, the state oilcos are neither innovators nor originators.
In today’s conventional resources plays — in which the resource is easy to locate but commercial development is a technological marvel — these state-owned outfits are sunk. So, now, they’re casting about for opportunities to barge into other countries, buy up developed reserves and find out how the locals do things.
But once these companies gain control of assets, those assets are usually out of play. Petronas and CNOOC, far from adding anything to Alberta’s energy sector, would merely draw from it. And that’s before we get to the issue of whether such companies might be bridgeheads for industrial espionage, cybercrime or intimidation of expatriate dissidents, as well as plain old corruption.
Foreign investment has been of tremendous benefit to Alberta — one could almost say we’d have no energy sector without it. It’s to our eternal great fortune that our main source of foreign investment has been the U.S. Were we now to welcome investment by companies from a radically different ideological environment, Alberta would gain capital.
But in technology, expertise and the free exchange of assets and ideas, we’d lose. IE
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