* Petronas-Progress extend closing by 30 days to Nov. 30
* Canadian govt had blocked proposed deal earlier in Oct
* Company says to make further submissions to win approval
* Progress shares rise 6.7 pct
By Niluksi Koswanage
KUALA LUMPUR, Oct 29 Malaysian state oil company
Petronas said on Monday it has extended the closing date on its
bid for Canadian gas producer Progress Energy Resources
until Nov. 30, as it works to overturn the Canadian government's
rejection of the proposed deal.
Canada blocked Petronas' C$5.17 billion ($5.18 billion) bid
for Progress this month after Industry Minister Christian
Paradis said it was unlikely to bring a "net benefit" to the
country. The government gave Petronas 30 days to make additional
representations to alter the ruling.
Petronas said it intends to make further submissions to the
ministry in order to obtain approval of the proposed deal. The
company said it had met with Canadian officials to understand
the basis for the rejection.
The transaction was earlier expected to close by Oct. 31.
Under the terms of the deal, Petronas has the right to extend
the outside date from Oct. 31 for up to 90 additional days, in
30-day increments, if the required regulatory approvals have not
Two Petronas sources familiar with the deal told Reuters
earlier on Monday that the company had agreed to an extension
with Progress and was eager to complete the acquisition despite
the unexpected decision by Canada.
The Petronas board agreed to the extension at a regular
monthly meeting, the sources told Reuters. The Malaysian company
is also studying additional steps to reassure Canada that the
proposed acquisition will meet the "net benefit" requirement,
the sources said.
"Petronas will go all the way to secure this deal. It is
important to Petronas that the deal is done," one of the sources
The Canadian government, sources have told Reuters, wanted
to approve the deal but was afraid doing so would tie its hands
when reviewing a much more controversial $15.1 billion bid by
China's CNOOC Ltd for Nexen Inc.
Spokespeople for Canadian Prime Minister Stephen Harper and
Paradis were not immediately available to comment.
Officials from Petronas and Progress held talks in Ottawa
last week with the investment review division, part of the
country's industry ministry. Canadian officials are drawing up
new guidelines for investment by foreign state-owned companies,
possibly complicating Petronas' attempt to improve its offer.
Petronas sources said Canada was not keen on Progress being
delisted from the Toronto Stock Exchange if the Petronas buyout
was approved, due to concerns about accountability.
Progress had no comment on the discussions.
"We don't have anything further to add to what is already
contained in the news release," Greg Kist, a spokesman for the
company said in an e-mail.
CNOOC has pledged to seek a listing of its own shares on the
Canadian exchange, establish international headquarters in
Calgary and retain Nexen's staff and capital spending.
"Progress is a much smaller deal than Nexen, is the
argument, and Petronas has promised to retain Progress staff,"
said the second Petronas source with direct knowledge of the
"After all, we need the expertise in unconventional oil and
gas, but we now need to make changes to convince Canada."
Petronas officials say they will underline their plans with
Progress under an existing joint venture to build an LNG export
terminal on the Pacific coast.
"Petronas is moving on with this joint venture for the LNG
export terminal. It will bring about more jobs," said the second
Progress CEO Michael Culbert has blamed a "communications
breakdown" for Canada's rejection of the deal, and said he was
optimistic the deal could get back on track.
Harper's office has declined to comment on whether
CNOOC-Nexen derailed the Petronas-Progress approval, or if there
had been miscommunication between his government and the
Progress shares rose sharply following the extension of the
arrangement. The shares were up C$1.23, or 6.7 percent, to
C$19.59 by midday on the Toronto Stock Exchange.