PetroChina to buy 49.9 % in Canada's Encana's Alberta shale gas prospect for $2.2 bn

Undettered by the Canadian government's new takeover rules for overseas state-run companies, PetroChina, yesterday agreed to buy a 49.9 per cent stake in Canada's biggest natural gas producer Encana Corp's Alberta shale gas prospect for C$2.2 billion ($2.2 billion).

The proposed deal comes a few days after Canada 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.

Canadian Prime Minister Stephen Harper, who had come under fire over the Cnooc deal from the opposition and some members of his own Conservative party, said that after approving the controversial acquisition, Canada would only consider future acquisitions by state-owned companies in exceptional circumstances.

Although the timing of the deal is fraught with risk, Calgary, Alberta-based Encana said that the deal of selling a non-controlling interest to PetroChina, allows the partners to bypass regulatory review under the country's new stringent restrictions.

"Our understanding is that it does not require any government approvals at all," Encana's CEO, Randy Eresman said in an interview.

The proposed deal comes more than a year after Encana, one of North America's largest natural gas producers, terminated a proposed C$5.4 billion deal to sell half of its holdings in a shale gas prospect in northeastern British Columbia to PetroChina. (See: Canada's Encana Corp calls off C$5.4-bn shale gas deal with PetroChina)