Canada has approved the $15.1 billion bid for Nexen by CNOOC, but says 'no more'.
With no Canadian bidders for Nexen, China's CNOOC knew it was a matter of political will rather than tough bidding that would win the day. Despite several delays, the Canadian Government has finally agreed to the Chinese oil major's deal to buy shale oil producer, Nexen.
However, the legislators have also clearly stated that this is likely to be the last of its kind, with the decision that other foreign state-owned enterprises may only have minority stakes in Canadian organiations. Only under exceptional circumstances will there be another total buy-out, although the exact meaning of "exceptional" remains unclear.
The Canadian oil sands represent the world's third-largest proven reserves of crude and the government is confident that other firms will be keen to invest. However, Canada is keen to retain domestic control of this sector. There need for foreign investment in the natural resources sector is estimated at some $650 billion over the next decade alone. Canada is also leaning towards exporting energy to Asia rather than the US.
The regulators are yet to determine whether takeovers are a net benefit to Canada. By pledging to make Calgary the headquarters of its operations in the Americas, where it has already made major investments, CNOOC has already addressed one of the concerns over net benefit for the Canadian authorities.
Despite earlier rejecting the deal, the Government has also given the go-ahead for gas company Malaysia's state-owned Petronas' takeover of Progress Energy Resources. Canadian authorities will put another tick in the net benefit box with this deal - Petronas has also agreed to have Canadians on the Progress board as independent directors and to retain the local workforce.