In the latest rush to take advantage of oil opportunities in Canada, Exxon Mobil announced it signed a deal to acquire Celtic Exploration Ltd. for around $2.6 billion. The deal would give the U.S.-based supermajor access to shale reserves in British Columbia and Alberta. It also follows a string of moves by rival foreign companies to establish a foundation in North America. While the Canadian government is eager to entice investors to its oil reserves, recent public opinion surveys suggest most are wary of what looks like a foreign takeover of the petroleum sector.
Exxon's division in Canada announced it acquired 545,000 acres of shale in British Columbia and another 104,000 acres in neighboring Alberta province in the deal with Calgary-based Celtic Exploration. As of December, Celtic estimated the reserve potential at around 128 million barrels of oil equivalent. Andrew Barry, president of ExxonMobil Canada, said the acquisition adds "significant" resources to its unconventional portfolio in North America. Celtic, for its part, said the acquisition was in the company's best interest and represented a fair value for shareholders.
The Canadian government of Prime Minister Stephen Harper had said it was important for the country to expand its economic footprint outside of North America. In February, the prime minister traveled to Beijing in order to draw Chinese investors to his country's oil sector. Canada is among the world leaders in terms of oil and officials there had said roughly $500 billion is needed to keep the momentum going into the next decade. Exxon's bid to take on Celtic for $2.6 billion follows a $15 billion bid by state-owned China National Offshore Oil Corp. to acquire Canadian oil and natural gas company Nexen. Malaysia's state-owned Petronas, meanwhile, has offered more than $5 billion for Progress Energy Resources, based in Calgary.
Exxon, CNOOC and others are looking to North America as a way to secure their portfolios against rival action in Russia and Latin America. A public opinion survey, however, finds that most Canadians are wary of foreign takeovers. Survey company Angus Reid Public Opinion, in an online survey involving 1,000 Canadian adults, found that most respondents reacted negatively to foreign control of their natural resources. The survey noted that most "are not particularly supportive" of the CNOOC deal in particular.
Whether that sentiment extends to China exclusively remains to be seen, though recent trade disputes in the renewable energy sector suggest that may indeed be the case.
Tuesday's town-hall debate between U.S. President Barack Obama and Republican challenger Mitt Romney sparked outrage from Chinese state media, which claimed the economic tirades against Beijing did little to foster bilateral friendships.
"U.S. politicians need to paint a truer picture for their constituents," a report from the Xinhua news agency reads. "This picture should embrace China's rise and acknowledge that engaging with China will amplify win-win results, but scapegoating, isolating and vilifying China will hurt both sides."
With Beijing warning the Harper government not to let political matters interfere with business affairs, the race to tap into North American shale may be a reflection of the broader geopolitical issues at stake.
Daniel Graeber is a senior journalist at the energy news site Oilprice.com.