CNOOC Ltd's US$15.1 billion bid for Canada's Nexen Inc may still succeed though the risks of politics blocking the deal rose after Ottawa rejected Malaysian oil major Petronas' takeover of another Canadian firm, analysts said.

But CNOOC's offer to buy oil sands producer Nexen may be successful because only 32 percent of the Canadian firm's current production is in the country, Neil Beveridge, analyst at Sanford C. Bernstein, said in a note. Another factor that may favor the deal is that CNOOC has agreed to retain Nexen's employees and list shares in Toronto, he added.

Petronas and Progress Energy Resources Corp yesterday said they plan to meet with Canadian officials and work together to overturn Canada's surprise move on Friday to block Petronas' US$5.2 billion bid for Progress, which has all its assets in Canada. Petronas has 30 days to tweak its offer.

Petronas' case "has increased the probability that the CNOOC/Nexen deal will not be approved and sends a clear signal that Canada is not as open to oil and gas mergers and acquisitions as it has appeared," Beveridge said. But he added the differences between Progress and Nexen "make us still believe the transaction will close."

A final decision by the Canadian government on the CNOOC/Nexen deal is set to be made on November 9.

Go to Forum >>0 Comment(s)