Petronas agrees to Canada's extended review of Progress Energy deal

Malaysian state oil company Petronas has agreed to the Canadian government's decision to extend the review of its $5.12-billion bid for Progress Energy Resources Corp, Reuters today reported, citing two Petronas sources familiar with the deal.

The Petronas board is also evaluating ways of tweaking its offer in order to show that the proposed acquisition will have a "net benefit" for Canada, the report added.

Earlier this month, the Canadian government blocked Petronas' takeover bid for gas producer Progress Energy.(See: Canadian government blocks Petronas $5.12-bn bid for Progress Energy)

Giving opaque and a one-line reason for blocking the deal, Christian Paradis, Canada's industry minister, had said, ''I am not satisfied that the proposed investment is likely to be of net benefit to Canada.''

To make matters worse, the Canadian government did spell out the problems it found in the deal, and while questioned by the media on reasons for blocking the deal, Paradis ducked the question by saying, "Due to the strict confidentiality provisions of the Investment Canada Act, I cannot comment further on this investment at this time."

Analysts had speculated that Canada's rejection of the Petronas-Progress Energy deal had more to do with paving the way to block China's state-owned oil company Cnooc's proposed $15.1-billion bid for Canada's oil producer Nexen Inc.