Canada blocks US$5.2b Petronas bid, raising doubt on China oil deal
Surprise move that could signal problems for a much larger CNOOC-Nexen deal
Canada has blocked Malaysian state oil firm Petronas’ C$5.17 billion (HK$40 billion) bid for gas producer Progress Energy Resources in a surprise move that could signal problems for a much larger Chinese deal in the country’s energy sector.
Canada’s announcement late on Friday, minutes before a deadline, was a blow to Petronas, whose domestic oil supplies are shrinking and which has been seeking to boost its resources beyond Malaysia and volatile areas such as Sudan.
It also raises doubts over Chinese oil group CNOOC’s C$15.1 billion offer for oil producer Nexen and could weigh on other Canadian firms hoping for foreign investment to tap their vast energy reserves.
A rejection of the CNOOC bid would likely damage trade ties Canada has been trying to build with China, underlining political sensitivity to Chinese corporate expansion in North America.
“I have sent a notice letter to Petronas indicating that I am not satisfied that the proposed investment is likely to be of net benefit to Canada,” Industry Minister Christian Paradis said in a statement.
The government, which has said C$630 billion investment is needed in Canada’s energy sector over the next decade, has been trying to balance concerns over the deals with that requirement for capital.
The companies have 30 days to make the offer more palatable.