The Canadian government has thwarted the latest overseas bid for domestic shale gas interests.
The latest deal, with Malaysian state oil firm Petronas offering $5.2bn for Canadian gas producer Progress Energy Resources, has been rejected by the Canadian government, raising questions about the final outcome of CNOOC's controversial $15.1 billion bid for Nexen Inc.
Canada may be rueing its decision to court overseas investment - estimated at a required C$630 billion - needed to exploit the world’s third-largest proven oil reserves. The CNOOC and Petronas bids are just the latest from China and the rest of Asia, putting Canada under pressure from its US neighbours.
Last year Petronas purchased a $1.1 billion stake in a shale gas field from Progress. In June of this year Petronas bid for Progress to gain control of its 800,000 acres holdings in the Montney shale-gas region of northeastern British Columbia which could feed a planned liquefied natural gas facility on the Pacific coast.
The Malaysian state-owned company, which recently had its African pipelines all-but shut down after border clashes between South Sudan and Sudan, put in an increased bid in July of c$22 per share to buy Canadian Progress Energy only to find it blocked by the Canadian government just minutes before the deadline.
Canada's nervousness has manifested itself in a number of delays and procrastination over the deals, with sources suggesting a variety of reasons including the outcome of the US elections. The Petronas bid was extended by two weeks for closer scrutiny by the government, while the Nexen deal is now heading towards its second decision deadline, now scheduled for 10th December, although it has been stated that there will be no opportunity for a third review. Reasons for the delayed review of the CNOOC acquisition have been its “unprecedented” size according to the Canadian Ambassador Guy Saint-Jacques.
Canada last blocked a major foreign takeover in 2010 when it rejected Australian BHP Billiton's $39 billion bid for Potash Corp, the world's largest fertilizer maker. The Canadian government intends to create a set of rules for takeovers for foreign state-owned enterprises which may be delivered at the same time as the CNOOC/Nexen decision.