When President Obama put on hold plans for an oil pipeline from Canada to the United States, Canada's prime minister said perhaps it was time to turn to Asia.
Last week further evidence emerged that if America isn't interested in Canada's mucky tar sands, China is.
On July 23 CNOOC, a Chinese state-owned oil giant, announced it had reached a $15 billion deal to buy Nexen, a Canadian energy firm with big holdings in tar sands and expertise in drilling for shale gas, another unconventional hydrocarbon.
Regulatory approval could take nine months, but Canadians reckon it is likely to be granted. Canada welcomes Chinese investment in a way its southern neighbor does not. In 2005, for example, CNOOC made a hostile $18 billion bid for Unocal, an American gas company.
Although it offered more than Chevron, a local oil major, the Chinese firm was forced to back down after U.S. lawmakers denounced it as a threat to national security. That shocked China's energy bosses and forced them to revamp their approach to overseas acquisitions. The new strategy was evident last week.
What's different this time? Part of the answer lies in tactics. Wang Yilin, CNOOC's boss, has played his cards well. CNOOC's head office for the Americas will be in Calgary, its shares will be listed in Toronto, its capital investment will increase and the new firm will continue research into tar sands in Alberta.
Taking no chances, Wang has already secured full support from Nexen's board and is also offering a premium of more than 60 percent for shareholders.
A bigger change, though, may lie in strategy. The first wave of Chinese energy acquisitions abroad, especially in Africa and Latin America, was driven by the country's energy insecurity, which prompted a clumsy scramble to buy oil-and-gas wells. This was a costly and inefficient way of securing energy supplies, since oil is a fungible, global commodity that will find its way to the highest bidder regardless of embargoes or who owns the wells.
The latest round of Chinese investment, by contrast, is driven by a thirst for knowledge. China has vast reserves of shale gas and other unconventional fuels. The snag is that these resources are hard to extract. So Chinese firms are keen to buy foreign ones, such as Nexen, with the necessary expertise.
Several recent deals -- such as the $5.9 billion spent since 2010 to secure minority stakes in U.S. energy firms -- are designed to teach Chinese managers and geologists about unconventional drilling). A CNOOC tie-up with Anglo-Dutch Shell, announced Wednesday, may also help.
So what next? Thanks to a fall in asset prices since the global financial crisis, Chinese energy firms have a "once in 100 years" buying opportunity, according to Sanford C. Bernstein, an investment bank. Sinopec, another state-owned oil firm (whose brash boss, Fu Chengyu, ran CNOOC when it bid for Unocal), snapped up a 49 percent stake in Talisman Energy's assets in the North Sea, between Britain and Norway, for $1.5 billion. It may not be Unocal, but it could still be a sign of bigger deals to come.