Finance department memo says foreign ownership of energy sector higher than reported by StatsCan
Canada has been partly insulated from the sharp drop in oil prices because so much of the energy sector is foreign owned, says an internal Finance Canada document.
The Feb. 20 memo says up to half of Canada’s oil and gas sector is owned by foreign investors, higher than reported by Statistics Canada using different calculations.
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“As a result, the potential negative wealth effects of lower oil prices on consumption may be considerably less than might appear,” says the memo for deputy minister Paul Rochon.
Statistics Canada reported in December that about 37 per cent of Canada’s oil and gas extraction sector was under foreign control in 2012, or about $206 billion of the $563 billion total. But the agency uses a method that ignores who owns shares in widely held Canadian energy companies.
Up to half in foreign hands
By estimating the number of foreign stockholders, and adding them to foreign owned or controlled firms, Finance Canada economists suggest that between 40 per cent and 50 per cent of the energy sector is in non-Canadian hands.
NDP finance critic Nathan Cullen says high foreign ownership levels help explain why so little value-added activity is done in Canada’s oil patch. (Adrian Wyld/Canadian Press)
“A significant amount of foreign capital was brought into Canada to expand oil and gas production,” says the document. “These foreign investors benefited as energy prices increased, but are sharing capital losses with Canadians as prices fall.”
A copy of the memo, with a key section blacked out, was obtained by CBC News under the Access to Information Act.
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