UPDATE 4-Canada approves Nexen and Progress Energy bids

Sat Dec 8, 2012 4:00am IST



* Canadian dollar firms on the news

* Gov't to impose stricter conditions on foreign investment (Adds background on Nexen)

By Michael Erman and David Ljunggren

NEW YORK/OTTAWA, Dec 7 (Reuters) - Canadian authorities approved the acquisition of Nexen Inc by CNOOC Ltd and the purchase of Progress Energy by Petronas, easing months of anxiety over the fate of foreign investments in Canadian resources.

The rulings, which has been closely watched by investors and politicians alike, follow months of debate over how much of Canada's energy sector should be controlled by foreign oil companies.

The Canadian dollar firmed against the U.S. dollar after Reuters reported the CNOOC deal had been approved.

The government also said it would impose stricter conditions on investments by state-owned enterprises in the future, and that it would welcome non-controlling minority investments by such enterprises in Canadian firms.

CNOOC has offered $15.1 billion to buy Nexen, which has Alberta oil sands assets and offshore operations in the North Sea, Gulf of Mexico and Nigeria.

In approving the deal, the Canadian government said CNOOC made significant commitments on transparency, employment and capital investments.

CNOOC's takeover of Nexen was overwhelmingly approved by Nexen shareholders in September, but the Canadian government delayed approvals while it drafted a long-promised update to the rules governing investments by state-owned foreign companies.

It also had to deal with the qualms of some of its own members over whether companies from the communist country should be allowed to buy up Canadian energy assets.

The acquisition brings CNOOC Nexen's 43 percent stake in the Buzzard field in the North Sea, the most important contributor to the crude blend used to set the Brent crude price that serves as the international oil price benchmark.

It also includes oil production from Yemen, offshore West Africa and the Gulf of Mexico.

CNOOC also gains full control of Nexen's Long Lake oil sands project in northern Alberta, properties containing as much as six billion barrels of recoverable crude and a 7.2 percent stake in the Syncrude Canada Ltd joint-venture.

Industry Minister Christian Paradis had in October turned down the C$5.2 billion ($5.3 billion) bid by Malaysian state-owned energy company Petronas for Progress but had given it a chance to make new representations.

($1=$0.99 Canadian) (Additional reporting by Solarina Ho, Euan Rocha and Alastair Sharp in Toronto; Writing by Jeffrey Jones; Editing by Frank McGurty, Bernard Orr, Tim Dobbyn and Leslie Gevirtz)

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