China-owned CNOOC applies for Nexen deal approval
TORONTO (AP) — Chinese energy giant CNOOC has filed its formal application for Canadian government approval of its $15 billion offer for Canadian oil and gas producer Nexen Inc. It would be China's biggest overseas energy acquisition.
Canadian Industry Minister Christian Paradis said Wednesday he is conducting a review of the proposal, which was announced last month.
The foreign takeover must be deemed a "net benefit" to Canada under the Investment Canada Act. The review will take 45 days initially, but can be extended by 30 days or more.
"The Minister of Industry will take the time to properly scrutinize this transaction to assess that, if it goes forward, it is likely to be of net benefit to Canada," said Alexandra Fortier, the press secretary for the minister.
Nearly all foreign takeovers are approved in Canada, but Canada's Conservative government did reject Anglo-Australian BHP Billiton's hostile takeover bid for Saskatchewan's Potash Corp. in 2010 and the sale of Vancouver-based MacDonald, Dettwiler and Associates' space-technology division to an American company in 2008.
The government has allowed Chinese companies to take stakes in energy companies.
CNOOC and other big state-owned Chinese energy companies have increased purchases of oil and gas assets in the Americas as part of a global strategy to gain access to resources needed to fuel China's economy. Despite its slowing growth, China's demand for energy is soaring.
The companies have moved more carefully since CNOOC tried seven years ago to buy Unocal but was rejected by U.S. lawmakers citing national security fears.
In an apparent show of commitment to Canada's interests, CNOOC is pledging to set up a regional headquarters in Calgary, Alberta, where Nexen is based. It also says it will keep the Canadian company's management and projects in place and list shares on the Canadian bourse
Paradis said last month that he would review how the deal affects investment, employment, production and resource processing in Canada.
Prime Minister Stephen Harper and some of his cabinet ministers have also suggested that it would like Canadian firms to get better access to the Chinese market.
Harper has made trade with China a top priority after the Obama administration delayed a decision on whether to approve the Keystone XL pipeline from Alberta to the U.S. Gulf Coast. Harper said last week the CNOOC takeover would only go ahead if it is in the best long-term interests of the Canadian economy.
Nexen operates in western Canada, the Gulf of Mexico, North Sea, Africa and the Middle East, with its biggest reserves in Canadian oil sands. It produced an average of 213,000 barrels of oil equivalent a day in the second quarter of this year.
Nexen's board approved the takeover after CNOOC offered a 62 percent premium on the stock price.