The Canadian government approved two acquisitions by international state-owned energy companies for Canadian oil sands and shale gas assets but indicated that approval for future transactions by other state-owned enterprises for petroleum assets would be approved only under exceptional circumstances.
CNOOC Ltd.'s $15 billion offer for Nexen Inc. received Canadian approval although the transaction awaits US and UK approvals because Nexen also has assets in the Gulf of Mexico and in the UK North Sea (OGJ Online, July 30, 2012).
In addition, Canadian government officials also approved a $5.5 billion offer from Petronas Carigali Canada Ltd. for Progress Energy Resources Corp. The Petronas offer initially was rejected in October (OGJ Online, Oct. 29, 2012).
Prime Minister Stephen Harper said on Dec. 7, "The government of Canada has determined that foreign-state control of oil sands development has reached the point at which further such [deals] would not be of net benefit to Canada."
CNOOC Chairman Wang Yilin said CNOOC was "very pleased to have received Industry Canada's approval, which recognizes the long-term economic benefits for Calgary, for Alberta, and for Canada in our proposed acquisition of Nexen."
Canada's Minister of Industry has to approve international acquisitions before the transactions can be finalized. The approval stems on the ministry's assessment of "net benefit to Canada" as outlined by the Investment Canada Act (OGJ Online, Oct. 29, 2012).
Harper outlined a strict new framework that limits state-owned enterprises to minority stakes in Canadian enterprises except in what he described as "exceptional circumstances."
Harper told reporters after the approvals were announced: "To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments only to see them bought and controlled by foreign governments instead."
CNOOC noted that Nexen's assets, which will expand CNOOC's own global offshore footprint, are mainly in Western Canada, the UK North Sea, the Gulf of Mexico, and offshore Nigeria. Nexen is focused on conventional oil and gas, oil sands, and shale gas.
Since 2005, CNOOC has invested in Canada by acquiring stakes in MEG Energy Inc., OPTI Canada Inc., and a 60% interest in Northern Cross (Yukon) Ltd. OPTI Canada is Nexen's partner in the Long Lake steam-assisted gravity drainage production facilities.
Nexen Chairman Barry Jackson said, "We are pleased that the government of Canada has recognized the opportunities for Nexen's employees, stakeholders, communities, and projects that the proposed transaction with CNOOC will present."
Petronas plans to acquire Progress, a Calgary gas producer focused on exploration, development, and production of large, unconventional gas plays in northeast British Columbia and northwest Alberta. Progress holds acreage in the Montney shale gas play.
Last year, Petronas and Progress formed a joint venture to develop a portion of Progress' Montney shale assets in the foothills of northeast British Columbia. Both companies said they wanted to consider opportunities to develop LNG export capacity on the west coast of British Columbia.
In making the initial acquisition announcement, Petronas and Progress said they plan to build a terminal in Prince Rupert, BC (OGJ Online, June 28, 2012).
Paula Dittrick | Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.