Having bought Canada's OPTI last year, China's CNOOC is now set to buy its partner Nexen.
China's third largest oil operator, state-owned China National Offshore Oil Corporation (CNOOC) has put in a $15.1bn offer for Canadian oil producer, Nexen. On paper, the deal looks too tempting to be refused by shareholders, with the bid equating to $27.5 per share, a 60% premium on the closing share price two days before the bid was announced on 23rd July.
Nexen's Calgary Headquarters Image: Nexen |
The acquisition would be the largest foreign takeover by a Chinese company and has already been approved by the Nexen Board. It follows almost a year to the day after CNOOC's $2.1bn purchase of Canada's OPTI - a partner of Nexen - which gave the Chinese oil giant a direct stake Canada's lucrative oil sands operations.
The Nexen deal not only gives CNOOC a further stake in the British Columbian field, but also takes it into operations in the Gulf of Mexico, Colombia, the UK North Sea, Poland, Yemen and West Africa.
However, the purchase is still subject to Canadian Government approval and this is where it could run into trouble. While shareholders may be keen to seal the deal, political pressure ramped up within days of the news, both within Canada and from the US. Canadian critics fear, amongst other issues, the motivation and operating style of a state-owned, rather than privately run, company taking over Nexen.
Meanwhile US politicians from both sides of Congress have united in criticising the deal, citing national security as its key concern. However, the underlying issue is undoubtedly the potential loss of further key oil and gas resources to China from reserves so close to home.