TORONTO-Canada extended its review of a Chinese state-owned company's US$15.1 billion bid for Canadian energy producer Nexen Incorporated by 30 days yesterday, giving the government more time to consider the merits of CNOOC Ltd's controversial proposal. "The proposed transaction is undergoing a rigorous review under the Investment Canada Act," said Christian Paradis, Canada's industry minister, in a brief statement announcing the extension. "The required time will be taken to conduct a thorough and careful review of this proposed investment."
The extension, while expected, comes amid festering concerns about the deal. Many Canadians fear that a successful bid by the Chinese state-owned company could spark a wave of mega takeovers of Canadian energy producers by foreign enterprises. The oil sands of the Western Canadian province of Alberta 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. By some estimates, Canada requires more than Cdn$600 billion (US$612 billion) of energy investments over the next decade, and much of it will have to come from outside the country. CNOOC's proposal, launched in July, carries a higher price tag than any other foreign takeover bid attempted by a Chinese company.