Canada has removed most restrictions on foreign investment in the energy industry.
Federal Energy Minister Jake Epp told a Calgary conference the percentage of Canadian ownership of the industry is less important than a healthy industry. Epp is not concerned that control of the industry could be lost as a result of increased foreign ownership.
"Control is not necessarily ownership," he said. "If you look around, this is very much a regulated industry."
Under the policy changes:
- U. S. investors can acquire companies or properties with assets of as much as $150 million without approval from Investment Canada, which screens foreign investments. The $150 million ceiling without review brings the petroleum industry in line with other industries covered under the Canada-U.S. Free Trade Agreement.
- Direct investment by other foreigners of more than $5 million and nondirect investments exceeding $50 million remain subject to Investment Canada review.
Ottawa has dropped a target of 50% Canadian ownership of the upstream petroleum sector. A regulation that only Canadian companies with severe financial problems can be acquired by foreign buyers also has been dropped.
Canadian federal and provincial governments will retain control of production, transportation, and trade of energy resources.
Industry spokesmen said they expect added investment capital but cannot not estimate the flow. They welcomed the potential of increased investment for an industry hit by recession and low prices.
The Canadian Petroleum Association said the changes are a signal to financial markets that the Canadian industry is once again an attractive place to invest.
Independent Petroleum Association of Canada head Gerry Protti said IPAC members are spreading the word about the relaxed rules to the international investment community.
David Kilgour, energy critic for the opposition federal Liberal party, said the regulations set a double standard that treats foreign investors other than Americans as second class citizens. Epp countered that the rules are different because Canada is involved in various international trade talks and does not want to give away bargaining chips.
Alberta Energy Minister Rick Orman applauded the federal move but said it was overdue.
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