UPDATE 3-CNOOC confident of Nexen deal approval despite extension

Fri Nov 9, 2012 2:55pm EST

* Canada extended review by a month to Dec. 10

* CNOOC chairman says extension no surprise

* CNOOC chairman says confident deal will go through

BEIJING, Nov 9 (Reuters) - CNOOC Ltd, China's top offshore oil and gas producer, said it is confident of winning regulatory approval from Canada this year for its $15.1 billion bid for Nexen Inc, even though Ottawa has extended its review of the deal twice.

CNOOC launched China's richest foreign takeover bid in July when it agreed to buy Nexen, a Canadian oil and gas producer. But the success of its bid began to look shaky after Canada held up Malaysian state oil company Petronas' $5.2 billion bid for Progress Energy Resources Corp.

Canada has been conducting a review to determine whether a takeover by the Chinese state-owned enterprise would bring a "net benefit" to Canada. Ottawa said on Nov. 2 that it had extended the review by a month to Dec. 10.

The extension was not a surprise, CNOOC Chairman Wang Yilin said on Friday.

"It is a big acquisition worth $15.1 billion. It would be our biggest-ever overseas acquisition, and because of the sheer size of the project, the government and relevant authorities ... will need to handle large amounts of review work," he said.

"We are fully confident that the deal will succeed," Wang told reporters on the sidelines of the Communist Party congress in Beijing. "We expect the transaction to be completed by the year-end."

Buoyed by the comments, Nexen shares were up 64 Canadian cents, or 2.7 percent, at C$24.17 ($24.17) by midafternoon on the Toronto Stock Exchange. However, they remain well below CNOOC's offer of $27.50 per share.

Industry sources have said CNOOC's bid might have a better chance of success compared to the Petronas deal as only about a quarter of Nexen's assets are in Canada, while Progress Energy's operations are fully centred in Canada.

A spokesman for Canadian Prime Minister Stephen Harper declined to comment.

Harper said on Thursday that his government would make decisions very soon on foreign investment proposals that it is considering and on the broader framework for dealing with such investments.


Governments are under pressure to maximise control of their natural resources as a buffer against the rise in commodity prices over the past 10 years.

While Canada, which has the world's third-largest oil reserves and is the third-biggest producer of dry natural gas, is less prone to resource nationalism than its neighbour the United States, there is growing wariness on Chinese investment.

According to a poll released by the University of Alberta in October, 64 percent of Albertans opposed Chinese investment in Alberta in the form of full ownership.

CNOOC is pressing on in its search for overseas assets as it has only nine years' worth of reserves based on current production levels - one of the lowest ratios among global oil majors.

Nexen has oil sands and shale gas operations in the province of British Columbia.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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