UPDATE 2-Alberta leader backs Nexen deal, executives less sure

* Alberta premier sees "a lot of benefit" for province

* Western businesses support deal more strongly than others

* Manulife CEO says Chinese are reliable investors

* Trade minister says Canada-China free trade talk premature

* House of Commons to vote on demand for public consultations

(Adds House debate, Clement, closing price, paragraphs 7, 9, 23)

By Louise Egan

OTTAWA, Oct 1 (Reuters) - The premier of the oil-rich province of Alberta said she sees benefits from the proposed $15.1 billion sale of Canadian oil producer Nexen Inc to a Chinese state-owned company, but a survey published on Monday showed half the country's executives would oppose a no-strings deal.

"At the end of the day, our view is that if this is in Alberta's interest, it should go ahead. And we think there's a lot of benefit for Alberta and Canada in this deal," Premier Alison Redford told the Calgary Herald newspaper.

It was Redford's clearest statement yet on CNOOC Ltd's

takeover bid for Nexen, which has substantial holdings in the oil sands of northern Alberta, the biggest proven crude oil resource outside Venezuela and Saudi Arabia.

Redford does not have a formal say on whether the takeover will be approved by the federal government, but in the Calgary Herald report she said her office has offered advice to the government.

Under the Investment Canada Act, foreign takeovers worth more than C$330 million ($337 million) face a federal review to determine whether they are of net benefit to Canada.

The Nexen deal has raised worries inside Canada's governing Conservative Party, where some are wary of letting China extend its foothold in the Alberta oil sands, and the opposition New Democratic Party (NDP) has voiced grave concerns over the transaction.

On Wednesday, the House of Commons will vote on an NDP motion demanding public consultations on the proposed purchase. The motion is to be debated on Tuesday, and while it is unlikely to pass, it will give prominence to concerns politicians may have.

Provincial politics do not formally play a role in the final decision, but it has been widely acknowledged that Ottawa's surprising 2010 decision to block the takeover of fertilizer producer Potash Corp by Australian miner BHP Billiton Ltd was partly influenced by Saskatchewan Premier Brad Wall's outspoken opposition. Most of Potash Corp's operations are in Saskatchewan.

The industry minister responsible for the Potash decision, Tony Clement, however, told Reuters on Monday that Wall's views did not really play into the final decision: "I had to make an independent judgment."

Business executives are deeply divided on the merits of the Nexen bid, according to a poll published on Monday by the Globe and Mail newspaper.

Fifty percent said Ottawa should not give an unconditional green light to CNOOC. The top two conditions they said CNOOC should agree to were keeping jobs in the country and giving Canadian companies reciprocal access to the Chinese market.

Thirty-one percent were "somewhat opposed" and 19 percent "strongly opposed" to a approval without any conditions.

Support was stronger in oil-producing Western Canada, where 53 percent of executives favored approving the takeover with no conditions. That compared with just 35 percent in the central province of Ontario who held that view.

Four in 10 business leaders nationwide said they would give stronger support to such a bid if it were made by a U.S. company.

If the Conservatives allow the takeover, it would help Beijing fulfill its drive for better access to energy resources to help fuel the world's second-largest economy.

While Canada insists it is open to foreign investors, the rejection of the $39 billion bid for Potash Corp raised questions about Ottawa's next move.

Canada risks a setback in relations with China if it rejects the takeover at a time when it is openly trying to sell more Alberta oil to the Asian giant and is emphasizing the need to expand trade with fast-growing emerging markets.

Trade Minister Ed Fast drove home that point on Monday, and did not close the door on the possibility of eventual free trade negotiations with China.

"It would be a big mistake not to continue to work with the Chinese government to work to eliminate barriers to trade and investment between us," he said.

"At this point in time, it would be premature to speculate on whether Canada will move forward with any type of trade negotiation with China," he said.

Canada has in the past been critical of China's human rights record but that should not stand in the way of a business deal that will provide much-needed capital in the energy sector, said Don Guloien, president and chief executive of Manulife Financial , an insurance company with operations in China.

"Having worked directly and extensively with Chinese investors and government and knowing others who have done the same, I can attest to the fact that large Chinese companies and funds are long-term, thoughtful, consistent and reliable investors," Guloien wrote in a letter to the Globe and Mail.

Nexen shares moved higher on Monday morning but closed down 0.1 percent at C$24.88 on the Toronto Stock Exchange. The stock has traded well below CNOOC's C$27.50-a-share offer, a 61 percent premium to the price of Nexen shares before the bid, due to concerns that public opposition will persuade the government to block the deal.

($1=$0.98 Canadian)

(Additional reporting by Julie Gordon in Toronto and Randall Palmer in Ottawa; Editing by Peter Galloway)


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