Canadian Prime Minister Stephen Harper said Beijing-based Cnooc Ltd. (883)’s $15.1 billion bid for Nexen Inc. (NXY:US) raises tough policy issues his government is considering in its review of the takeover.
“This particular transaction raises a range of difficult policy questions, difficult forward-looking issues, and those things will all be taken into account under the act in assessing the net benefit of this investment,” Harper told reporters today in Ottawa.
“We have approved many transactions, we have significantly modified some, and we have blocked some transactions,” Harper said at a news conference with Tanzanian President Jakaya Kikwete.
Canada is examining the offer from the Chinese state-owned oil producer under the Investment Canada Act, which requires that foreign takeovers represent a “net benefit” to the country. Canada’s 2010 rejection of Melbourne-based BHP Billiton Ltd. (BHP)’s hostile $40 billion bid for Potash Corp. of Saskatchewan Inc. was one of only two acquisitions since 1985 to be blocked under the current law.
Harper said the government is still gathering “information and opinions” for its review of the friendly offer for Calgary- based Nexen.
Industry Minister Christian Paradis told reporters separately the government will take as much time as needed to make a decision and an extension of the review period is a possibility.
Under Canadian law, the government can unilaterally extend the original 45-day review period by 30 days, and extend the review further if Cnooc agrees. The government said Aug. 29 it received the application.
The opposition New Democratic Party today called on the government to reject the bid, citing a “lack of transparency” in the approval process.
“A lot of jobs and growth depend on the investments that come into this country,” Harper said when asked about the position of the NDP, the biggest opposition party in the country’s legislature. “As well, Canada is a significant investor in other parts of the world.”
The prime minister said Canada will make its decision regardless of the position taken by the U.S., which is also reviewing the acquisition.
Nexen’s oil and gas assets include production platforms in the North Sea, the Gulf of Mexico and in Nigeria, as well as oil-sands reserves at Long Lake, Alberta, where it already produces crude in a joint venture with Cnooc.
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