CNOOC asks Canada to approve Nexen takeover

China National Offshore Oil Corporation has formally requested the Canadian government to approve its US$15 billion offer for Nexen.

Canadian Industry Minister Christian Paradis said he is conducting a review of the proposal. The foreign takeover must be deemed a “net benefit” to Canada under the Investment Canada Act. The review will take 45 days but can be extended by 30 days or more.

The government has previously permitted Chinese companies to take stakes in Canadian energy companies but the CNOOC would become the largest foreign takeover of Canadian oil and gas company in Canada's history.

CNOOC and other state-owned Chinese energy companies have increased purchases of oil and gas assets in the Americas as part of a global strategy to gain access to resources needed to fuel China’s economy. Despite its slowing growth, China’s demand for energy is soaring.

Nearly all foreign takeovers are approved in Canada, but there have been notable exceptions. Canada reject Anglo-Australian BHP Billiton’s hostile takeover bid for Saskatchewan’s Potash Corporation in 2010 and the sale of MacDonald, Dettwiler and Associates’ space-technology division to an American company in 2008.

Prime Minister Stephen Harper and some of his cabinet ministers have also suggested that it would like Canadian firms to get better access to the Chinese market.