Malaysia’s Petronas commits $36 billion to B.C. gas plant, pipeline
Malaysian Prime Minister Mohd Najib springs pledge of $36-billion investment in Canada as Stephen Harper tours region for Asia-Pacific summit.
SEAN KILPATRICK / THE CANADIAN PRESS
Prime Minister Stephen Harper inspects an honour guard as he meets with Prime Minister of Malaysia Mohd Najib in Putrajaya on Sunday.
NUSA DUA, INDONESIA—Prime Minister Stephen Harper arrived Sunday night in Bali for an Asia-Pacific leaders’ summit just hours after receiving an unexpected boon in Malaysia — a $36-billion vote of confidence from that country’s state-owned oil and gas company.
Malaysian Prime Minister Mohd Najib sprung the “gargantuan” investment figure during a joint photo-op earlier in the day with Harper, saying Malaysia’s state-owned oil and gas company Petronas has committed itself to building both a liquid natural gas plant in British Columbia and the pipeline to feed it.
“I’m told that this is the largest direct foreign investment in Canada by any country,” Najib said, flanked by Harper following a formal welcoming ceremony at a sprawling new government precinct outside the capital, Kuala Lumpur.
Najib called it a “significant landmark decision” by Petronas, which last year spent more than $5 billion to buy Alberta-based Progress Energy Inc .
The Petronas takeover — and a bigger oilpatch buyout by China’s state-owned CNOOC — triggered months of hand-wringing in the Harper government over majority takeovers of Canadian companies by foreign state-owned enterprises (SOEs).
The government eventually did approve the deals late last year but at the same time introduced new rules that permit such takeovers only in the most exceptional circumstances.
The policy change put a major chill on direct foreign investment in Canada by SOEs, and analysts have recently begun questioning whether the Conservative policy shift is scaring off much-needed foreign capital.
On Sunday, Najib rode to Harper’s defence, calling the promised Petronas infrastructure investment a testament “to the level of confidence we have in the policies of the Canadian government.”
Harper’s reaction to Najib’s announcement was almost muted by contrast.
“Look, we view the Petronas investments very positively and all the indications I have is that Petronas is looking at further investment,” he said. “The government of Canada is very excited about that possibility, as are all those I’ve talked to in the energy sector.”
The Prime Minister’s Office, however, declined to provide any details of the promised $36-billion investment and it referred reporters to Petronas for details.
In June, provincial officials in B.C. had spoken of a $19-billion LNG plant and pipeline investment by Petronas, so it wasn’t clear Sunday where the new $36-billion total comes from.
Both Najib and Harper flew with their separate delegations to Indonesia following the Sunday morning meeting in Malaysia.
Regardless, the announcement provides Harper a much-needed shot in the arm as he brings Canada’s trade and investment message to Bali.
Harper has been involved in an increasingly acrimonious and very public tussle with U.S. President Barack Obama over the proposed Keystone XL pipeline to take Alberta bitumen south. He is also meeting stiff resistance within Canada to the proposed Northern Gateway pipeline to the B.C. coast.
Najib was asked by a Malaysian reporter what guarantees Petronas had been given on its multi-billion-dollar Canadian investment “over 30 years.”
The investment has a long horizon, Najib agreed, adding he is confident that not only the current Conservative government but future governments would support Petronas’s Canadian involvement.
Harper says his government judges each foreign investment “on its merits” and called it a policy of “discretion.”
It’s a fine balance for a Conservative government that says it is courting Asian markets and wants to make Canada an “emerging energy super power” but has faced a backlash from its political base over foreign state-owned enterprise takeovers, especially Chinese.
The policy shift has not been welcomed in China, noted analyst Yuen Pau Woo, president of the Asia Pacific Foundation of Canada.
Malaysia, which has few state-owned enterprises, won’t much mind, Woo said in an interview — “they’re in the barn already” — but China has a host of state-owned companies looking to expand and Canada is not sending welcoming signals.
