Oil sands challenges for foreign investors

Although the oilsands have been known to exist in the Athabasca area of Alberta for over 200 years, it is only in the past decade that a convergence of economic and technological factors has allowed for the production and upgrading of bitumen into synthetic oil on a sustainable commercial scale. The oilsands developed slowly for many decades, outside of public scrutiny; however, international attention is now focused not only on their great promise, but also on their challenges.

The magnitude of the oilsands resource, its location in a secure, stable country, the promise of long-term supply, a well-defined regulatory environment, fair royalties and the potential for a strong return on investment have all resulted in increased domestic and foreign investment in the oilsands industry. This confers considerable benefits, as mines, steam assisted gravity drainage (SAGD) facilities and the supporting infrastructure are all capital-intensive undertakings. Foreign investment is important to the development of the oilsands and will continue to be welcome.

Under the Investment Canada Act, the federal government reviews foreign takeovers worth more than C$600 million to ensure that they represent a “net benefit to Canada” and meet a national security test that requires input from departments responsible for Canadian security. The act also has guidelines relating to state-owned enterprises looking to invest in Canada.

Click here for the comprehensive review published by International Law Office.