Important issues remain on CNOOC bid for Nexen: source

Tue Nov 20, 2012 12:39pm EST
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By Randall Palmer

OTTAWA (Reuters) - CNOOC Ltd still needs to reach agreement on critical issues with the Canadian government related to its $15.1 billion bid for oil firm Nexen in order to win approval of the deal, a source familiar with the negotiations said on Tuesday.

Differences center on commercial aspects of the deal, notably commitments on employment and capital expenditure, said the source, who declined to be identified due to the sensitivity of the issue. "There do remain important issues outstanding," the source said, adding that talks were continuing.

The government is set to rule by December 10 on whether to approve the takeover, which is one of two pending offers for domestic companies by Asian state-owned enterprises.

The source close to the Nexen talks said negotiations were proceeding with an eye to coming to a conclusion by the notional December 10 deadline, and there was no sign of an impasse.

Separately on Tuesday, Petronas PETR.UL, the Malaysian state-owned company that is seeking approval for its bid for Progress Energy Corp (PRQ.TO: Quote), said it had again extended the closing date of its offer, to December 30 from November 30. Canada had rejected Petronas's initial takeover attempt, ruling that the deal would not bring a net benefit to Canada.

A Petronas source said last week that the Malaysian state oil company had submitted a modified bid.

The Canadian government has promised to clarify its rules on foreign investment as it announces its decisions on the two takeovers.

The CNOOC takeover has been controversial in Canada, where the Conservative government is trying both to satisfy its own demand for more foreign investment and a diversified export market for Canadian energy products, as well as appeasing back-benchers wary of deal-making with China.   Continued...