(AP) Canada appears set to rule on China's biggest overseas energy acquisition, a $15.1 billion proposed takeover by state-owned CNOOC's of Canadian oil and gas producer Nexen.
Prime Minister Stephen Harper's office said he will make a statement at 5:15 p.m. Eastern (2215 GMT) and Industry Canada has announced a news media lockup at 4 p.m. for what it calls an important announcement at 5 p.m.
Trading in Nexen stock was halted in Toronto.
Harper's Conservative government has been studying whether CNOOC's deal and a smaller foreign takeover, Malaysian state-owned oil firm Petronas' $5.2 billion bid for Progress Energy, represent a net benefit to the country. The review decisions are expected to shed light on Canada's policy toward foreign takeovers, particularly when the foreign company is owned by the state.
Concerns have been raised that approvals could lead to a flood of deals that put control of Canada's vast energy in foreign hands.
CNOOC and other big state-owned Asian energy companies have increased purchases of oil and gas assets in the Americas as part of a global strategy to gain access to resources needed to fuel their economies. Chinese companies have moved more carefully since CNOOC tried seven years ago to buy Unocal but was rejected by U.S. lawmakers citing national security fears.
Harper's government originally turned down Petronas' bid for Progress Energy in October. The government did not publicly explain the decision to block the deal but said a new policy framework for foreign takeovers will be released soon. Petronas was allowed to reapply.
The decision to turn it down in October has raised doubts about whether Canada is open to foreign investment.
Harper's Conservative government also rejected Anglo-Australian BHP Billiton's hostile takeover bid for Potash Corp. in 2010 and the sale of Vancouver-based MacDonald, Dettwiler and Associates' space-technology division to an American company in 2008.
But Harper has lobbied the Chinese to invest in Canada's energy sector and has said foreign investment is needed to develop Canada's vast oil and gas deposits. Turning down CNOOC's bid would harm relations with China.
Some analysts say the CNOOC-Nexen deal will likely be approved because more than 70 percent of Nexen's assets are outside Canada.
Wenran Jiang, an energy expert and professor at the University of Alberta, said the stakes are big for Harper who has said Canada needs foreign investment to development its vast energy deposits. Harper also spent the last two years lobbying the Chinese to invest.
Jiang, like most analysts, expect both deals to be approved, particularly the CNOOC takeover.
A rejection would be a shock, not just to the Canada-China relations. Harper would make a fool of himself and the international investment community would doubt that Canada is a place to invest, Jiang said. The long term damage would be very formidable.
Jiang and others say future Asian investment would be in jeopardy if the Nexen deal is turned down. China's growing economy is hungry for Canadian oil. Chinese state-owned companies have invested billions in Canadian energy in recent years.
The Canadian province of Alberta has the world's third-largest oil reserves after Saudi Arabia and Venezuela: more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025.
Nexen, a mid-tier energy company in Canada, operates in western Canada, the Gulf of Mexico, North Sea, Africa and the Middle East, with its biggest reserves in the Canadian oil sands. It produced an average of 213,000 barrels of oil a day in the second quarter of this year.
Nexen's board approved the takeover in July after CNOOC offered a 62 percent premium on the stock price. Shareholders voted overwhelmingly to support the deal in September. The stock has long traded at 10 percent discount to the offer on fears Canada would not approve the takeover.
Nexen stock traded down 6.5 percent after Industry Canada said an announcement would be made after the close. Progress traded down 5.4 percent.
In an apparent show of commitment to Canada's interests, CNOOC is pledging to set up a regional headquarters in Calgary, Alberta, where Nexen is based. It also says it will keep the Canadian company's management and projects in place and list shares on the Canadian bourse in Toronto.
Petronas has also made a series of promises in the proposed takeover of Progress.