CNOOC, Nexen deal wins US approval

Updated: 2013-02-14 09:38

By Reutersin Washington and Calgary (China Daily)

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US regulators have approved the $15.1 billion takeover of Canadian oil and gas company Nexen Inc by China's State-owned CNOOC Ltd, removing the final obstacle to the country's largest foreign takeover.

The deal to buy Calgary, Alberta-based Nexen had already passed regulatory muster in Canada and Europe. But approval from the Committee on Foreign Investment in the United States was also needed because Nexen has US interests.

Nexen said on Tuesday that CFIUS had given the green light and that it expects the deal to close the week of Feb 25, seven months after China's top offshore oil and gas producer made its bid of $27.50 a share.

The Nexen statement did not indicate whether CFIUS had imposed conditions on the approval, and company officials were not available for comment.

Nexen's shares climbed 2 percent to just below the offer price on Tuesday, closing at $27.43, their highest level since CNOOC made its bid for Nexen on July 23 last year.

The US approval came even though the distrust of US investments by Chinese companies has lingered since CNOOC's 2005 attempt to buy Unocal Corp for $18.5 billion, a deal that foundered on US national security concerns.

Late last month, CFIUS cleared a bid by the US unit of China's Wanxiang Group to buy bankrupt A123 Systems Inc, a maker of electric car batteries, although some lawmakers warned the deal would lead to the transfer of sensitive technology developed with US government funding.

A US legislator said he planned to introduce legislation to block any future transactions that, like the Nexen deal, involve the transfer of royalty-free leases.

"Chinese government-owned oil corporations should not be allowed to drill for American oil in the Gulf of Mexico without paying a dime in royalties to US taxpayers," said Representative Edward Markey, the ranking Democrat of the House Natural Resources Committee.

Senator John Hoeven, a Republican from North Dakota, said the CFIUS approval did not surprise him. But he was disappointed the Obama administration has not moved to secure Canadian oil supplies by approving TransCanada Corp's Keystone XL pipeline.

"It shows that time doesn't stand still," he said in an interview, noting that Canadian oil resources will go to other parts of the world if the United States keeps dragging its heels on pipelines. "We've got to move on projects like Keystone."

The Canadian government declined to comment on the US approval. "That's a US decision," Energy Minister Joe Oliver told reporters. "That company will, I'm sure, conduct themselves as good corporate citizens in Canada."

The Nexen acquisition gives CNOOC new offshore production in the North Sea, the Gulf of Mexico and off western Africa, as well as producing properties in the Middle East and Canada.