Canada gives Malaysian bid for Progress more scrutiny

Fri Oct 5, 2012 4:50pm EDT
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By Euan Rocha and Jeffrey Jones

TORONTO/CALGARY (Reuters) - The Canadian government has extended by two weeks its review of a C$5.2 billion ($5.3 billion) bid by Malaysian state oil company Petronas to take over Progress Energy Resources Corp (PRQ.TO: Quote) as the country's focus on foreign moves to buy Canadian resource companies intensifies.

The unexpected delay comes as Ottawa also vets a $15.1 billion offer for Nexen Inc NXY.TO by CNOOC Ltd (0883.HK: Quote), the Chinese state-controlled company, a deal that has been slammed both by Canada's main opposition party and from some within Conservative Prime Minister Stephen Harper's own government.

Most analysts have said they expect Petronas's takeover of Progress to face little trouble as the government assesses if the transaction passes its main test of being of net benefit to Canada.

Progress is a natural gas producer, as opposed to a developer in the strategic Alberta oil sands, and plans set by Petronas/Progress to build a multibillion-dollar liquefied natural gas plant on the Pacific Coast fit with a push by Harper to export the fuel to Asia.

Legal sources familiar with studies done by the government's Investment Canada agency said the extension to October 19 could be routine, tied to a busy schedule within the review division. But one lawyer said it was clear that the Malaysian investment is not as politically tricky as a deal involving China.

"Let's face it, Malaysia is nothing in terms of geopolitics whereas China is an emerging superpower and is increasingly assertive," the lawyer said. "Malaysia will do the Progress deal and perhaps no others, whereas China could buy all of the oil sands if we let them."

Both Progress shareholders and Canadian antitrust authorities have already approved the bid, which Petronas raised when a competing offer surfaced last summer.

Industry Minister Christian Paradis appeared to suggest that investors should not read too much into his pushing the decision deadline out, but offered no reason for the delay.   Continued...

Motorists queue to fill natural gas at a Petronas station with its landmark Petronas Twin Towers headquarters in the background, in Kuala Lumpur February 4, 2012. REUTERS/Bazuki Muhammad