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Jen Alic

Jen Alic

 

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Green Light for China-Nexen Takeover

Green Light for China-Nexen Takeover

By 25 February, China will have acquired the US assets of Canada’s Nexen Inc. for $15.1 billion after the US Committee on Foreign Investment cleared China’s CNOOC for the last remaining regulatory hurdle.

CNOOC Ltd’s acquisition of Nexen’s US assets will represent the largest-ever overseas purchase by a Chinese company, and it was the Committee on Foreign Investment’s task to determine whether such a move represented a national security threat.

While Nexen is a Canadian company out of Calgary, the US has jurisdiction for the acquisition because 8% of Nexen’s total production takes place in the Gulf of Mexico. Canada had already approved the deal in December, but made it clear that this would be the last such deal by a foreign state-owned company. 

US officials have hinted similarly. Rep. Edward J. Markey (D-Mass.) vowed to introduce legislation that would give the US Interior Secretary power to block "a loophole preventing the approval of similar lease transfers in the future."

“Chinese government-owned oil corporations should not be allowed to drill for American oil in the Gulf of Mexico without paying a dime in royalties to US taxpayers,” Markey said. “The Interior Department should have the authority to review all possible transfers of oil and gas leases on public lands so that we can prevent massive wealth transfers from US taxpayers to foreign governments.”

For CNOOC, it’s a very attractive acquisition, which includes Nexen’s assets in the UK, the US Gulf of Mexico and elsewhere, like offshore Nigeria. One of the best assets will be Nexen’s lucrative North Sea’s Buzzard fields. In total, the purchase will boost CNOOC’s production by about 23% for 2013.

What do the markets say? Well, Nexen rose 2% in Toronto on the news, climbing to $27.43.

By. Jen Alic of Oilprice.com




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