Encana, PetroChina take $2.2 billion stab at joint venture
By Jeffrey Jones
CALGARY, Alberta (Reuters) - PetroChina (0857.HK: Quote) (601857.SS: Quote) will pay Encana Corp (ECA.TO: Quote) C$2.2 billion ($2.2 billion) for a 49.9 percent stake in a rich Alberta shale gas prospect, the first test of new guidelines issued by Ottawa for major energy investments by foreign state-owned enterprises.
Encana said the venture, with a non-controlling interest for PetroChina, allows the partners to bypass stringent reviews under the Canadian government's new restrictions announced last week.
The government said it was examining the proposed deal to determine if it would face a review under the Investment Canada Act, which governs foreign investment.
It is the second overseas deal announced by PetroChina (PTR.N: Quote) this week, after the $1.63 billion purchase of a minority stake in an Australian liquefied natural gas project, as the state-controlled oil giant seeks to have half its production outside of China within eight years.
"As in all such cases, due diligence is being exercised by reviewing details of the proposed investment to determine if it is reviewable under the act," Margaux Stastny, spokeswoman for Industry Minister Christian Paradis, said in a statement.
Investments by foreign state-owned companies that do not involve acquisition of control were not reviewable under the act except for their national security implications, she said, but added: "There are circumstances in which control is deemed to be acquired even where a minority ownership interest is involved."
The statement gave no further details.
Canada issued its new framework for approving takeovers of resource assets, particularly oil sands, by foreign state-owned companies, when it approved a $15.1 billion takeover by China's CNOOC Ltd (0883.HK: Quote) (CEO.N: Quote) of oil producer Nexen Inc NXY.TO, and a bid for Progress Energy Resources (PRQ.TO: Quote) by Malaysia's Petronas PETR.UL. Continued...