The Canadian government announced new investment guidelines on Dec. 7, 2012, aimed at restricting the level of control that state-owned enterprises (SOEs) can have in Canadian oil sands companies. GlobalData reports that, as a result of these investment restrictions, foreign investment by SOEs with controlling powers will likely be redirected to Canada’s gas sector, which is not affected by the restrictions. Gas-sector M&A activity is also expected to increase.
Chinese SOEs have invested heavily in Canadian oil sands assets, accounting for approximately 80% of the investments in Canadian oil sands companies since January 2012. Mindful of LNG suppliers targeting Asia, the Canadian government has, in effect, redirected foreign investments to the country’s less-developed shale gas and LNG projects, thus ensuring that SOE investment in Canada’s gas sector will help support the country’s planned LNG plants.