Chinese target Canada’s tar sands oil with proposed purchase of Nexen

He did indicate Canada would like to see the U.S. get involved in the oil sands through Keystone. “But I can tell you we can work as aggressively as we can with the ones going west, out to the Asian market,” he said. “It will be up to the Americans what happens with the ones going south.”

“We’re going to want more trade with China,” he added.

But Perrin Beatty, president and CEO of the Canadian Chamber of Commerce and former Canadian defense minister, has been assured the Chinese won’t deliberately bypass the U.S. to sell the oil in China.

CNOOC competes with other Chinese oil companies, so it won’t simply bring it back home at a lower price, if it can make more money selling to other parts of the world, including the U.S.

“They will function on a commercial basis,” Mr. Beatty said. “They are in competition with other Chinese oil companies.”

If anything, this may heat up the need for Keystone. With more oil being produced, it could create a bottleneck on the Canada-U.S. boarder that needs to be relieved with a big pipeline, said Bev Dahlby, a distinguished fellow in tax and economic growth at the University of Calgary.

“It makes the need for Keystone even greater,” he said.

The sale of Nexen, which operates in part in western Canada, would reinforce the global significance of the controversial tar sands oil.

“It means the oil sands are attractive for global investors,” Mr. Beatty explained. “The fact the Chinese, Americans and others are looking at those resources really attests to that. It underscores the fact that this is an exceptional resource and others are interested in it.”

Regardless of whether the tar sands oil is dangerous for the environment, Mr. Beatty said, it can’t be any worse than relying on oil from hostile Middle Eastern nations.

“What other countries does the U.S. buy oil from that have stable democracies?” he asked. “Canada is the United State’s best friend, whether they know it or not.”

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