Canada extends review of CNOOC-Nexen deal by 30 days

Thu Oct 11, 2012 3:54pm EDT
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By Randall Palmer and David Ljunggren

OTTAWA (Reuters) - Canada said it needs more time to complete its review of a $15.1 billion Chinese bid to take over oil and gas explorer Nexen Inc NXY.TO, a deal that has raised fears about opening the Canadian energy sector to the Asian power's state-owned companies.

The government on Thursday extended its review of CNOOC Ltd's (0883.HK: Quote) bid by 30 days, to November 11. The decision comes amid a growing furor over alleged Chinese espionage in North America that could intensify opposition to the Nexen deal.

"The proposed transaction is undergoing a rigorous review," Industry Minister Christian Paradis said in a brief statement announcing the widely expected extension. "The required time will be taken to conduct a thorough and careful review of this proposed investment."

A spokesman for CNOOC Canada Ltd in Calgary declined to comment.

Canada is grappling with concerns that approval of the deal could spark a flurry of mega-takeovers of Canadian energy companies. Canada is home to the world's third-largest proven oil reserves, most of them in the western province of Alberta.

Under the Investment Canada Act, Paradis must decide whether the CNOOC-Nexen deal would bring a "net benefit" to Canada. Most analysts expect him to give the green light, with conditions.

Some inside Canada's governing Conservative Party are uneasy about allowing Chinese state-owned companies to buy up Canadian energy assets, accusing them of unfair business practices. Others cite what they say is China's patchy human rights record.

This week a U.S. congressional report urged American companies to stop dealing with two big Chinese telecoms equipment makers, Huawei Technologies Co Ltd HWT.UL and ZTE Corp (000063.SZ: Quote) (0763.HK: Quote), saying the Chinese companies could enable Beijing to spy on U.S. communications and endanger vital systems.   Continued...

A woman walks into the Nexen building in downtown Calgary, Alberta, in this July 23, 2012 file photo. Canada said October 11, 2012 it needs more time to complete its review of China's CNOOC Ltd $15.1 billion bid to take over Nexen Inc, a deal that has raised fears about opening the Canadian energy sector to China's state-owned companies. REUTERS/Todd Korol/Files