Mergers and takeovers: Canada blocks $5.2b Petronas bid

TORONTO/ KUALA LUMPUR: Canada blocked Malaysian state oil firm Petronas’s C$5.17 billion ($5.2 billion) bid for gas producer Progress Energy Resources, throwing the country’s energy sector into turmoil. The surprise move could signal problems for Chinese oil group CNOOC’s C$15.1 billion offer for oil producer Nexen and, longer term, weigh on other Canadian firms hoping for foreign investment to tap their vast energy reserves. Also, any rejection of the CNOOC bid will likely damage trade ties Canada had been trying to build with China, and will underline political sensitivity to Chinese corporate expansion in North America. The government, which said C$630 billion investment was needed over the next decade, had been trying to balance concerns over the deals with a need for foreign investment. Canada’s announcement late on Friday, minutes before a deadline, was a blow to Petronas whose domestic oil supplies were shrinking and which had been seeking to boost its resources beyond Malaysia and volatile areas such as Sudan.

Published in The Express Tribune, October 21^st, 2012.