* Canada has until Nov. 11 to decide fate of CNOOC bid
* Security, safety will form part of review, says minister
* Some fear allowing China to buy up Canadian energy assets
By Randall Palmer and David Ljunggren
OTTAWA, Oct 11 Canada said it needs more time to
complete its review of a $15.1 billion Chinese bid to take over
oil and gas explorer Nexen Inc, a deal that has raised
fears about opening the Canadian energy sector to the Asian
power's state-owned companies.
The government on Thursday extended its review of CNOOC
Ltd's bid by 30 days, to Nov. 11. The decision comes
amid a growing furor over alleged Chinese espionage in North
America that could intensify opposition to the Nexen 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 declined to
Canada is grappling with concerns that 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 CNOOC-Nexen deal would bring a "net benefit" to Canada. Most
analysts expect him to give the green light, with conditions.
Some inside Canada's governing Conservative Party are uneasy
about allowing Chinese state-owned companies to buy up Canadian
energy assets, accusing them of unfair business practices.
Others cite what they say is China's patchy human rights record.
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 , saying the Chinese companies could
enable Beijing to spy on U.S. communications and endanger vital
A Canadian official suggested strongly on Tuesday that
Huawei would not be welcome to help build a secure government
Public Safety Minister Vic Toews told reporters in Calgary
on Thursday that "every transaction that is referred to cabinet
is considered from a security and safety point of view."
Strategists for the Conservative Party issued a note to
legislators on Thursday stressing that "our government will
always act in the best interest of Canadians" and saying Paradis
would take into consideration views submitted by the public.
The CNOOC bid won a vote of confidence 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.
Nexen's portfolio includes operations in the oil sands,
shale gas in the province of British Columbia, and other assets
spread across the globe.
Those wary of the deal say that in return for allowing CNOOC
to buy Nexen, China should open up its markets to Canadian
companies and make it easier for them to operate there.
Guy Saint Jacques, Canada's new ambassador to China, said in
a speech in Montreal on Thursday that "we are resolved to ensure
that Canadian firms have access to markets ... like China's." He
also said he would press Beijing on human rights.
Paradis must weigh the takeover concerns against the energy
sector's pressing need for foreign investment. Ottawa says
Canada needs 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.
A CNOOC acquisition of Nexen would be the largest Chinese
foreign takeover ever.
The main opposition New Democrats - who oppose the deal as
it is currently structured - welcomed the 30-day extension and
called for public consultations.
"There are still many unanswered questions and it's the
Conservatives' job to respond to these questions before selling
our resources to the highest bidder," said the party's natural
resources spokesman, Peter Julian.
Nexen shares initially dipped 10 cents but at 2.35 p.m.
(1835 GMT) were up 10 cents to C$25.25 on the Toronto Stock
Exchange, 8 percent below CNOOC's cash offer of $27.50 a share.
"We believe the potential for downward pressure on the stock
exists, as speculators may take the extension (and potential
additional extensions) as a signal the deal may not be
approved," GMP Securities analyst Ryan Savage said in a note.
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 proposal from the
Malaysian state-owned company.
Paradis can announce another 30-day extension beyond Nov.
11, but only if both CNOOC and Nexen agree.
Ottawa last blocked a foreign takeover deal in 2010 when it
stunned markets by preventing Australia's BHP Billiton Ltd
from buying fertilizer producer Potash Corp.