Nexen gives CNOOC price power

Hong Kong-listed CNOOC's US$15.1 billion takeover of Nexen would give the Chinese company the largest stake of an oil field in the North Sea that "has increasingly influenced" global oil prices, according to a memo sent to Prime Minister Stephen Harper.

Nexen says it controls 43 per cent of the Buzzard oil field in the North Sea, off the coast of Scotland. Buzzard, which began production in 2007, is the largest discovery off the United Kingdom in the past two decades, according to Nexen's annual report.

"Oil produced in the North Sea is used to set global oil prices for approximately 60 billion barrels of crude sold every day," says a note prepared on August 17 for Harper by Wayne Wouters, a top government bureaucrat.

"The Buzzard field has increasingly influenced the global oil prices in recent years due to declining production at other North Sea fields."

Harper's government is reviewing the bid by CNOOC which is controlled by state-owned China National Offshore Oil Corporation under Canada's foreign-takeover law, which requires that acquisitions represent a "net benefit" to Canada.

Industry Minister Christian Paradis extended the review last month until December 10.