Canada approves China's CNOOC takeover of Nexen

The Canadian government on Friday approved the takeover of Calgary-based oil and gas producer Nexen Inc. by China National Offshore Oil Corporation (CNOOC) Ltd.. The state-owned Chinese company can proceed with its 15.1-billion-U.S.-dollar takeover of Nexen and the transaction "is likely to be of net benefit to Canada" under the Investment Canada Act, Federal Industry Minister Christian Paradis said in a statement. However, in a rare move, Canadian Prime Minister Stephen Harper held a news conference following the approval, telling reporters that while the CNOOC-Nexen deal was approved, it should be viewed as "the end" rather than the "beginning of a trend." He said his government has "determined that foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada." Beyond the oil sands, he added, other foreign takeovers will also face greater scrutiny on "the degree of control or influence" a state-owned enterprise (SOE) "would likely exert on the Canadian business that is being acquired" and "on the industry in which the Canadian business operates." While the financial threshold for reviewing SOE investments will remain at 330 million Canadian dollars (334 million U.S. dollars), the Canadian government plans to increase the review threshold for takeovers by private companies to 1 billion Canadian dollars (1.01 billion U.S. dollars) over the next four years. To receive Ottawa's approval, CNOOC has made commitments on transparency, disclosure, commercial orientation, employment and capital investment that "demonstrate a long-term commitment to the development of the Canadian economy," according to an Industry Canada statement. On Friday, the federal government also approved a 5.2-billion-U.S.-dollar takeover of Calgary-based Progress Energy Resources Corp. by Malaysia's Petronas. Although some Canadians worried about the SOE nature of CNOOC and Petronas, many businesspeople expressed their support for the takeovers, which they called win-win deals. John Manley, president and CEO of the Canadian Council of Chief Executives, a leading business organization, has said the federal government's approval of the two deals "sends a positive signal to investors in Canada and around the world." Also a former Canadian deputy prime minister and industry minister,Manley said that Canada has "a tremendous need for capital to develop our industrial base and achieve our potential as a leading exporter of energy and advanced energy technologies."