Canada grants approval for Nexen, Progress grabs
The Canadian government announced on Friday that it would approve two controversial investments in local firms by foreign state-owned companies.
Minister of Industry Christian Paradis issued the joint approvals on 7 December 2012, for the $15 billion takeover of Nexen by China's CNOOC and the $5.2 billion buyout of Progress Energy Resources by Malaysia's Petronas; both companies are based in Calgary and have a stake in the country's shale gas regions.
Prior to the announcement, the Canadian government had rejected Petronas' bid in October, citing a lack of ‘net benefit' to the country. Canadian Prime Minister Stephen Harper clarified that while the country will allow these investment deals in particular, similar bids will not be so easily accepted in the future.
"Let me be clear. When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments," Harper said in a speech in Ottawa.
Harper and Paradis promised to revise the Investment Canada Act's guidelines for approving such takeovers by state-owned firms, saying that future deals will be made only in exceptional cases.
"In light of growing trends, and following the decisions made today, the Government of Canada 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.
With no further obstacles, the Petronas/Progress deal is set to close by 12 December 2012. The pair announced plans for its Pacific Northwest LNG project, which includes the construction of an LNG export facility near Price Rupert as well as a the installation of a natural gas transmission pipeline to move gas from the Montney region of British Columbia to the export facility.
Petronas and Progress said initial investment will be between $9 billion and $11 billion with the construction phase generating up to 3,500 direct jobs. A final investment decision is expected in 2014.
While CNOOC's Nexen bid has Canadian approval, it is still subject to approval by U.S. regulatory agencies.