Canada approves Cnooc-Nexen $15.1 bn deal

Canada yesterday finally approved the $15.1-billion acquisition of Nexen Inc by China's state-owned Cnooc Ltd, but vowed to block nearly all future prospective deals by state-owned enterprises in the country's rich oil sands.

The closely watched deal, China's biggest ever overseas acquisition, has yet to be approved by regulators in the US and the UK, since Nexen has significant assets in these two countries.

Observers had expected Canada to veto the takeover, especially after the regulator had in October rejected Malaysia's state-owned oil company Petronas $5.2 billion bid for Progress Energy. Canada yesterday also approved this deal after Petronas submitted a revised bid.

Canadian Prime Minister Stephen Harper, who had come under fire from the opposition and some members of his own Conservative party, said Canada would only consider future acquisitions in the oil sands by state-owned companies in exceptional circumstances.

Harper did not say under what exceptional circumstances the Cnooc-Nexen deal was approved, especially after China had backed off from making big ticket resource deals in Canada fearing that they would be rejected.

In 2010, Chinese state-owned chemical company Sinochem, deliberately did not table a counter offer for Potash Corporation of Saskatchewan for similar reasons. In that deal, Canada had rejected Anglo-Australian miner BHP Billiton's $38.6 -billion cash takeover bid for the world's largest fertilizer company.