A Malaysian minister flew to Canada for talks after Stephen Harper’s government blocked Petroliam Nasional Bhd.’s $5.2 billion bid for Progress Energy Resources Corp. (PRQ), a person familiar with the matter said.
Idris Jala, a minister in Prime Minister Najib Razak’s office, assured Canadian officials including Industry Minister Christian Paradis that Malaysia doesn’t interfere in the day- to-day management of state-owned Petroliam Nasional, said the person, who declined to be named as the meetings were private. The minister without portfolio, now back in Malaysia, didn’t participate in corporate negotiations, the person said.
Jala’s visit underlines the importance Malaysia attaches to overseas acquisitions as the nation seeks to boost oil and gas production. Buying Progress Energy would give Petroliam Nasional, also known as Petronas, ownership of the largest holder in the Montney shale-gas area of British Columbia and full control of the three Progress Energy fields in which the Malaysian company bought a stake last year.
“Malaysia needs to increase its effort to get energy assets around the world and Canada is known to have large reserves,” Azrul Azwar Ahmad Tajudin, Kuala Lumpur-based chief economist at Bank Islam Malaysia Bhd., said by phone. “Petronas needs all the help it can get from the government as it attempts to buy assets.”
Canada will decide on foreign-investment guidelines and on whether to approve “a couple” of proposals, including Cnooc Ltd.’s (883) $15.1 billion bid for Canada’s Nexen Inc. (NXY) in “the near future,” Prime Minister Harper told reporters yesterday in Ottawa.
A spokesman for Prime Minister Najib wasn’t immediately available to comment when telephoned and e-mailed today.
Malaysia’s crude oil production declined 11 percent to 573,000 barrels a day in 2011 from the previous year, according to the BP Statistical Review. Natural gas output fell 1.3 percent to 61.8 billion cubic meters.
Paradis rejected the takeover of the Calgary-based natural gas producer under Canada’s foreign-investment law on grounds it didn’t represent a “net benefit” to the country. The Malaysian state oil and gas company was allowed to appeal and is awaiting a decision after providing more undertakings, according to a statement from both companies on Nov. 20.
Petronas and Progress Energy have extended a deadline to complete the acquisition to Dec. 30 in light of the appeal, according to the joint statement.
Petronas wants to convince Canadian authorities of its operational independence from the Malaysian government, the Financial Times reported Nov. 12, citing Chief Executive Officer Shamsul Azhar Abbas. It has offered to appoint independent directors to Progress Energy’s board, according to the report.
Kuala Lumpur-based Petronas has also proposed a public offering of shares in Progress Energy within five years as a concession to Canada, a person with knowledge of the deal told Bloomberg News on Nov. 21, declining to be named as the negotiations are private. A listing would address shareholder concerns over the gas producer’s future, while giving the regulator oversight.
The rejection has raised questions about the openness of Harper’s government to foreign investment and cast doubt on whether Beijing-based Cnooc’s offer for Nexen will be approved.
Cnooc, China’s biggest offshore oil and gas producer, has accepted management and employment conditions set by the Canadian government as it seeks approval for its Nexen takeover, two people familiar with the matter said Nov. 20, declining to be named because negotiations are confidential.
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