Canada extends review of $15bn CNOOC-Nexen deal to Dec 10

REUTERS

LONDON

CANADA said it has extended its review of a $15.1 billion bid by China’s CNOOC for Canadian energy producer Nexen by a month to December 10.

Ottawa is conducting the review to determine whether a takeover by the Chinese state-owned enterprise would bring a ‘net benefit’ to Canada.

CNOOC launched China’s richest foreign takeover bid in July when it agreed to buy Nexen, whose global portfolios include oil sands and shale gas.

“The review period for CNOOC Limited’s proposed acquisition of Nexen under the Investment Canada Act has been extended to December 10, 2012,” Christian Paradis, Canada’s industry minister, said in a statement.

The extension will give Canada more time to articulate broad guidelines on foreign takeovers of Canadian companies.

The government wants to issue the framework at the same time it makes its ruling on the CNOOC proposal.

Under Canadian law, all major foreign takeover proposals are subject to approval of the federal government, which must certify that the deals benefit the country.

Canada blocked Malaysian state oil firm Petronas’ C$5.17 billion bid for gas producer Progress Energy Resources on October 20 but rather than completely ruling the acquisition out, Paradis offered Petronas 30 days to make new representations to the government.

The industry minister initially had issued a two-week extension before declaring that the transaction would not benefit Canada - raising doubts over CNOOC’s bid for Nexen - but offering the additional 30 days.

The proposed acquisition of Nexen has raised concerns within Canada about allowing a Chinese state-owned enterprise to control domestic resource assets.

On the other hand, Canada may have to try to build bridges with Asian markets that would welcome its energy supplies as the United States, long the largest market for Canadian energy exports, increases its own oil output from unconventional sources. Also, this year the United States rejected an initial application on the controversial Keystone XL pipeline project, Reuters reported on Wednesday that Canada was likely to extend its review of the CNOOC bid for Nexen beyond the November10 deadline.