OTTAWA – The federal government is extending its review period for the proposed takeover of Nexen Inc. (TSX:NXY) by China’s state-owned offshore oil company.
Industry Minister Christian Paradis says the review under the Investment Canada Act is being extended by 30 days and can be extended again, with the consent of CNOOC.
An initial 45-day review period was set to end Friday.
“A determination will be made based on the six clear factors that are laid out in detail in Section 20 of the act and the guidelines on investment by state-owned enterprises,” Paradis said in a statement.
“The required time will be taken to conduct a thorough and careful review of this proposed investment.”
China National Offshore Oil Corp. is offering $15.1 billion to buy Calgary-based Nexen in what is the largest deal so for in the Canadian oilpatch involving a Chinese company.
Under the legislation the deal, which has already been approved by shareholders, must be of “net benefit” to Canada to be approved.
The proposed takeover has sparked concern in Ottawa, with Prime Minister Stephen Harper having said it “raises a range of difficult policy questions.”
The Canadian Security Intelligence Service report for 2010-11 also warned that when companies with links to foreign intelligence agencies or hostile governments try to acquire control over strategic sectors of the Canadian economy, it can represent a threat.
The NDP has called on Ottawa to block the takeover and cited a litany of concerns including national security and environmental concerns as well as CNOOC’s human rights and employment record.
The deal also faces a review by regulators in the United States where similar concerns have been raised.
On Thursday, the New Democrats renewed their call for public consultations on the deal.
“There are still many unanswered questions and it’s the Conservatives’ job to respond to these questions before selling our resources to the highest bidder,” natural resources critic Peter Julian said in a release.
“The biggest question now is: are we going to have a genuinely transparent and complete study of the deal or is it going to be 30 more days of secrecy and political games?”
The Tories have called the NDP’s stance “reckless and irresponsible,” charging that the party is trying to politicize the review process.
Debt rating agency DBRS has said the benefits of the takeover of Nexen are “somewhat mixed” because the deal is not financially necessary for Nexen, which is already a strong company with good access to capital markets. However, it could bolster Canada’s relationship with China and open up new markets.
Both Nexen and CNOOC have sought to address concerns about the deal and have highlighted the potential benefits.
Nexen has said that CNOOC will keep the Nexen name and expand the role of the company’s Calgary headquarters to manage not just Nexen’s assets, but also some $8 billion of the Chinese company’s other assets in North and Central America.