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  • Energy: America Delays, China Advances

    The Canadian government just approved the $15.1 billion acquisition of integrated oil and gas producer Nexen by China’s third-largest oil company, state-owned China National Offshore Oil.

    The deal is an important step forward (or two) for Chinese investment, but a step back is probably soon to follow. Chinese outward investment has become a global force. The Nexen acquisition is the biggest ever by a Chinese enterprise and will push annual investment in 2012 to a new record. Moreover, the 2012 surge is focused on North America: Canada will be the leading recipient and the U.S. second. This will spur talk of a flood of Chinese investment in 2013 and extending indefinitely into the future.

    Such talk will be exaggerated, however. There have certainly been bursts in Chinese investment activity, but there have also been stalls. The Nexen deal coming late this year all but ensures that Chinese investment will fall in 2013.

    For the longer term, The Heritage Foundation’s China Global Investment Tracker documents well over $150 billion in troubled or even outright failed Chinese investments since 2005. In its announcement, Canada hinted at the principal reason for these setbacks: Host countries grow uncomfortable with large purchases by Chinese state entities. That unhappiness is an obvious opening for the U.S. to recognize the overwhelming mutual benefits of further energy cooperation with Canada and to move forward on the Keystone XL pipeline.

    While approving the Nexen deal, Ottawa practically begged for private-sector partners from countries with open markets. The Obama Administration is partly or even largely responsible for putting Canada in this awkward position by playing games with the Keystone pipeline and Canada–U.S. energy relations in general.

    The pipeline—and the right policy from the U.S. toward Canadian energy—would strengthen the American economy, add jobs, promote energy independence, and help perhaps our most important ally. It would also be a signal that the U.S. will compete with China in international markets, a competition that the vibrant American private sector would certainly win—if only it is permitted to.

    Posted in Energy [slideshow_deploy]

    3 Responses to Energy: America Delays, China Advances

    1. Dan says:

      Too bad we can't find some way show Washington even they would benefit from Keystone. Then maybe the collective disparaging would actually come down to "shovel ready jobs", streamline process manufacturing costs, utilize equipment standing still, build more and better equipment in the US, well you get the point, except we keep preaching to the choir. I would bet the only people who read this already know the benefits, others just don't care.

    2. theinsomniacs says:

      We all should do our share in taking care of our environment. We can start by going green. I found this fun social networking site, motleygreen.com, that lets you share green acts with fellow environmental advocates.

    3. Peter says:

      America is now into Shale Gas fraking instead of oil. It even let down its own Solar energy sector just recently. It seems to be ditching all other forms of energy and conentrating on Shale Gas. So Canada made the right choice as their oil sands will be irrevelant in global Energy production if USA (and China) went through with Shale Gas.

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