By Randall Palmer
OTTAWA Oct 11 Canada said it needs more time to
complete its review of China's CNOOC Ltd $15.1 billion
bid to take over Nexen Inc, a deal that has raised
fears about opening the Canadian energy sector to China's
The decision on Thursday to extend the process by 30 days
coincides with a growing furor over alleged Chinese espionage in
North America that could intensify opposition to the CNOOC deal.
"The proposed transaction is undergoing a rigorous review,"
Industry Minister Christian Paradis said in a brief statement
announcing the widely expected extension. "The required time
will be taken to conduct a thorough and careful review of this
A spokesman for CNOOC Canada Ltd in Calgary was not
immediately available for comment.
Canada is grappling with concerns that an approval of the
deal could spark a flurry of mega takeovers of Canadian energy
companies. Canada is home to the world's third-largest proven
oil reserves, most of them in the western province of Alberta.
Under the Investment Canada Act, Paradis must decide whether
the proposed takeover would bring a "net benefit" to Canada.
Most analysts expect him to give the green light, with
Some inside the governing Conservative Party are uneasy
about allowing Chinese state-owned companies to buy up Canadian
energy assets, accusing them of unfair business practices.
This week a U.S. congressional report urged American
companies to stop dealing with two big Chinese telecoms
equipment makers, Huawei Technologies Co Ltd and ZTE
Corp , as they could enable Beijing to spy
on communications and endanger vital systems.
A Canadian official suggested strongly on Tuesday that
Huawei would not be welcome to help build a secure government
A Toronto Star columnist, Thomas Walkom, said it was
unlikely Prime Minister Stephen Harper would simply ignore the
U.S. House Intelligence Committee report on Huawei and ZTE.
"In a rational world, Harper would probably dismiss the
House report as pre-election political bluster. But in the world
we inhabit, that is not always possible," Walkom wrote.
Even so, the proposed CNOOC deal won a vote of confidence on
Wednesday night from David Dodge, a former Bank of Canada
governor. He told reporters that Ottawa would retain control
over its oil reserves because they will remain in Canada.
"I can't help but think this is more anti-Chinese than it is
anything else because there's every reason to allow this one to
go through," he said.
Alberta's oil sands are the world's third-largest proven oil
reserve. Nexen's portfolio includes operations in the oil sands,
shale gas in the province of British Columbia and other assets
spread across the globe.
The government must weigh the takeover concerns against the
energy sector's pressing need for foreign investment. Ottawa
says Canada requires at least C$650 billion ($663 billion) of
energy investments over the next decade, and much of it will
have to come from outside the country.
CNOOC's bid, launched in July, would result in the largest
ever Chinese foreign takeover if it is approved.
Under the Investment Canada Act, the government is required
examine all deals worth more than C$330 million. An initial
45-day review can be extended by an additional 30 days. In some
cases, reviews are extended further.
Last week, Canada extended its review of a C$5.2 billion bid
by Malaysia's Petronas for natural gas producer Progress Energy
Resources Corp. The delay took some analysts by
surprise as few expect much opposition to the Malaysian
state-owned company's proposal.
The government last blocked a foreign takeover deal in 2010
when it stunned markets by preventing Australia's BHP Billiton
Ltd from acquiring fertilizer producer Potash Corp
, which is based in the western province of