* Canada says deadline for CNOOC bid can be extended
* Shares in target Nexen drop on news
* Takeovers not raised at Conservative caucus meeting
By David Ljunggren and Randall Palmer
OTTAWA, Dec 5 Canadian Industry Minister
Christian Paradis surprised markets on Wednesday by saying the
Dec. 10 deadline for ruling on a bid by China's CNOOC Ltd
for energy company Nexen Inc could be
extended, comments that nudged Nexen's shares lower.
Paradis said he did not want his comments to be construed in
any particular way.
"This is a deadline that could be extended, but once again,
I won't speculate and ... I don't want to send a signal," he
told reporters. "When the decisions are made and are ready to be
announced, this will be done. Don't interpret anything from what
I'm saying here."
The Canadian government is due to announce new foreign
investment guidelines at about the same time it delivers its
verdict on the CNOOC move and on a separate bid by Malaysia's
Petronas for Progress Energy Resources Corp.
Ottawa can extend the deadline beyond Dec. 10 if CNOOC and
Nexen agree, but markets mostly assumed the twice-extended
deadline would stand.
Nexen shares in New York fell to $24.50 from $24.62 after
Paradis spoke. That is above Tuesday's close of $24.35 but below
CNOOC's $27.50 offer price.
Progress shares eased to C$20.25 in Toronto from C$20.33
before the remarks. The stock closed at C$20.32 on Tuesday.
Petronas' offer is for C$22.
Shares of both Nexen and Progress have fluctuated over the
last few weeks as markets try to work out what the government
will decide. On Oct. 22, Prime Minister Stephen Harper said the
guidelines would come out "fairly shortly." On Nov. 8 he said
they would be issued "in the very near future."
Some Conservative legislators are concerned about the
prospect of foreign state-owned enterprises, especially Chinese
companies, buying up energy assets. Harper has said the
government's new guidelines will address that matter.
Finance Minister Jim Flaherty, who is not directly
responsible for investment decisions, said he couldn't address
the timing. "I can say that it's been given priority," Flaherty
told reporters in Ottawa.
Asked why the government was taking so long, Flaherty
replied: "It is a very important issue, and it's absolutely
imperative that the government get it right. So one must be
cautious and prudent and analytical."
Pressed further, he said only: "It'll be fairly soon."
The Conservative parliamentary caucus held its last regular
weekly meeting on Wednesday ahead of the Dec. 10 deadline. Four
legislators told Reuters that no one raised the issue of the
takeovers at the meeting and ministers did not say when the
decisions might come.
A leading Conservative told Reuters that party members were
still split over the CNOOC bid, noting that Harper, who
sometimes holds informal polls in caucus on various topics, had
not done so on the CNOOC bid.
"If you held a show of hands inside caucus on this, I do not
know what the result would be," the Conservative said.
Some Conservatives are deeply suspicious of China's
Communist government and what they say is its poor record on
But the government is keenly aware that Canada's energy
industry needs to access foreign capital to expand.
Political sources say the CNOOC bid is dividing the cabinet,
where opponents such as Immigration Minister Jason Kenney are
ranged against Natural Resources Minister Joe Oliver and Trade
Minister Ed Fast, who both think the deal should be approved
with appropriate safeguards.
Possible options for the government include limits on how
much of the energy patch state-owned enterprises could own and
strict conditions on levels of employment and investment.