CNOOC-Nexen deal

China’s CNOOC agrees to alter Nexen’s US oil lease, says reports

PUBLISHED : Saturday, 02 March, 2013, 11:54am
UPDATED : Saturday, 02 March, 2013, 11:55am

Chinese oil giant CNOOC Ltd has agreed to changes its oil-drilling leases in the Gulf of Mexico to quell US national security concerns as a condition for US approval of its $15 billion (HK$116.32 billion) buyout of Canada’s Nexen Inc.

The “most significant” term of the agreement involves removing CNOOC as site operator, Bloomberg reported, citing an email to employees from Peter Addy, the president of Nexen’s US unit.

The Wall Street Journal reported the new structure may be similar to those where a majority owner retains the bulk of profits and finances most of the costs, while minority stakeholders serve as the primary site operators.

CNOOC and Nexen executives had declined to give details of what they had to do to satisfy the Committee on Foreign Investment in the United States (CFIUS) following its extended review.

The deal needed US approval because Nexen owned more than 200 drilling leases in the Gulf of Mexico, a key oil supply to the world’s largest economy.

State-owned CNOOC could not be immediately reached for comment on Saturday.

Li Fanrong, CNOOC’s chief executive, said on Feb. 27 that the leader of its Canadian unit had freedom to run operations after the contentious deal had closed two days earlier.

Originally announced in July, China’s largest-ever foreign takeover won approval from Canadian regulators in December, but only overcame its last major hurdle in early February when the deal was cleared by the CFIUS.