CANADA: Possible delay to Canada foreign investment guidelines and CNOOC-Nexen decision

Thursday December 6 2012

It is being reported today that the decision on the acquisition by China`s state-owned CNOOC of Canadian petroleum producer Nexen could be delayed beyond the 10th December deadline.

As the government has stated that the decision and the new guidelines on Canada foreign investment acquisitions will be announced at the same time, any delay on the decision on Nexen, which has previously been extended on two occasions, would result in a delay on the new guidelines.

The guidance concerns when an acquisition is deemed to be of “net benefit” to Canada under the Investment Canada Act, and will address in particular concerns over acquisitions in strategic Canadian companies by foreign state-owned enterprises, notably as regards the energy sector.

A proposed acquisition by Malaysian oil company Petronas in Calgary-based Progress Energy Resources Corp. was rejected last month, however an appeal on the decision is currently pending. The acquisition, which would give Petronas ownership of the largest stakeholder in the Montney shale-gas area of British Columbia and full control of the three Progress Energy fields in which Petronas bought a stake last year, was rejected on the basis it was not of net benefit to Canada. It is the second rejection in the last two years,  following the 2010 failure of BHP Billiton’s bid for Potash Corp.

This information will be updated as further details become available.