CNOOC jumps last hurdle to buy Nexen

CNOOC, China's biggest oil and natural gas producer, has won approval to acquire the US assets of Nexen, its last regulatory challenge in the US$15.1 billion purchase of the Canadian energy company.

Calgary, Alberta-based Nexen said yesterday that the Committee on Foreign Investment in the United States had given the final green light needed for the acquisition.

It expects the deal to close in two weeks' time, seven months after CNOOC made its bid of US$27.50 a share.

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

CNOOC gains control of Nexen's Long Lake oil sands project in Canada's oil-rich Alberta province and billions of barrels of reserves in the world's third-largest crude storehouse.

Canada approved the contentious takeover late last year despite members of the ruling Conservative Party being concerned about China's human rights record. But Canada also insisted this was the last deal of its kind that it would approve, drawing a line against state-controlled companies taking majority stakes in the strategic oil sands.

US approvals, needed because of Nexen's Gulf of Mexico holdings, were slower as legislators examined whether the deal would threaten national security.

The United States has traditionally been more wary than Canada of Chinese investment, prompting some speculation that Washington might want Nexen to dispose of the US assets.

Nexen did not indicate in its release whether the committee had imposed conditions on the approval and the company was not immediately available for comment.

In 2005, the US blocked CNOOC's bid for Unocal Corp because of national-security concerns. An influential House committee last year urged US companies not to do business with Chinese telecommunications firms such as Huawei and ZTE over fears China could use equipment made by the two to spy.

Canadian stocks rose as energy companies advanced after the announcement of the CNOOC deal and crude oil touched a one-week high.

Nexen climbed 2.2 per cent on the news. Canadian Natural Resources rose 1.4 per cent as crude gained 0.5 per cent. Gran Tierra Energy jumped 6.7 per cent after the company announced an oil discovery in Peru. Agrium lost 0.7 per cent after appointing two directors to its board after talks to avert a proxy fight with activist investor Jana Partners LLC fell apart.

Additional reporting by Bloomberg