Response to Kelly Gu’s blog : Enbridge Northern Gateway: The Future of Nexen Inc.
Oct 8th, 2012 by yinyinaung.bettyhuang
Lawyers for environmental groups have pressed Northern Gateway pipeline representatives about the hypothetical possibility of Chinese interests buying control of the project. (CP)
The entrance of China’s National Offshore Oil Corp into Canada is known as foreign direct investment (FDI). This will increase employment and earnings may have a multiplier effect on Canada’s economy, stimulating growth. In addition, Canadian government will earn high tax revenue from NOOC’s profit. NOOC may bring along technology that may not be available in Enbridge. The cooperation between the two large firms will create synergy. They can have access to each others’ resources, including control of distribution channels, management know-how and human resources.
However, there will be loss of control as NOOC gains market share in Northern Gateway. Both firms will suffer from increased bureaucracy and slower channels of communication, especially when there are corporate cultural clash. In this case, “the Chinese environmental and manufacture safety and emergency awareness is not up to par with Canada’s strict standards.” This conflict will create inefficiency and slower decision making.
Canadian government should negotiate with NOOC before accepting their purchase of shares. NOOC should run its projects following Canada’s main rules and regulations, especially on environmental laws. Managers from both firms should exert their negotiation skills and be able to handle the added pressures and responsibilities that they will face.
Kelly Gu’s blog https://blogs.ubc.ca/kellysongmeigu/