From ‘China Daily Mail’ by chankaiyee2 :
Seeing its $3 trillion foreign exchange reserve dropping in value due to falling US dollar exchange rate, China is anxiously looking for opportunities to take over profitable foreign assets. CNOOC’s takeover of Nexen is China’s first success in purchasing substantial foreign assets. Encouraged by the success, China will further intensify its efforts to buy foreign assets.
With such a trend, we can foresee that China will step up building up its navy to protect its trade lifeline and foreign assets.
One thing that should be clear is that CNOOC is a state-owned enterprise belonging to the Chinese government. There will be further reform of economic liberalisation to enable China’s private sector to compete with the state-owned sector, but it does not mean the privatisation of the state-owned sector. The reform aims at introducing competition to make state-owned enterprises more efficient and boosting the development of the private sector.
The state-owned sector, if efficient, will provide huge income for the government to fund its social security systems without increasing tax. It involves vital interests for the Chinese government no matter what party controls the government.
The following is the full text of Reuters’ report on the event titled “CNOOC-Nexen deal wins U.S. approval, its last hurdle”:
U.S. regulators have approved the $15.1 billion takeover of Canadian oil and gas company Nexen Inc by China’s state-owned CNOOC Ltd, removing the final obstacle to the Asian country’s largest-ever foreign takeover.
The deal to buy Calgary, Alberta-based Nexen had already passed regulatory muster in Canada and Europe. But approval from the Committee on Foreign Investment in the United States (CFIUS) was also needed because Nexen has U.S. interests.
Nexen said on Tuesday that CFIUS had given the green light and that it expects the deal to close the week of February 25, seven months after China’s top offshore oil and gas producer made its bid of $27.50 a share.
The Nexen statement did not indicate whether CFIUS had imposed conditions on the approval, and company officials were not available for comment.
Nexen’s shares climbed 2 percent to just below the offer price on Tuesday, closing at $27.43, their highest level since CNOOC made its bid for Nexen on July 23 last year.
The U.S. approval came even though widespread distrust of U.S. investments by Chinese companies has lingered since CNOOC’s 2005 attempt to buy Unocal Corp for $18.5 billion, a deal that foundered on U.S. national security concerns.
Late last month, CFIUS cleared a bid by the U.S. unit of China’s Wanxiang Group to buy bankrupt A123 Systems Inc, a maker of electric car batteries, although some lawmakers warned the deal would lead to the transfer of sensitive technology developed with U.S. government funding.
CNOOC’s success in navigating the CFIUS approval process “is likely to be viewed as a positive development,” said Joshua Zive, senior counsel at Bracewell & Guiliani, a Washington law and lobbying firm. “That, in the current climate, is a moment of significance.”
But a U.S. legislator said he planned to introduce legislation to block any future transactions that, like the Nexen deal, involve the transfer of royalty-free leases.
“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 U.S. taxpayers,” said Representative Edward Markey, the ranking Democrat of the House Natural Resources Committee.
Senator John Hoeven, a Republican from North Dakota, said the CFIUS approval did not surprise him. But he was disappointed the Obama administration has not moved to secure Canadian oil supplies by approving TransCanada Corp’s Keystone XL pipeline.
“It shows that time doesn’t stand still,” he said in an interview, noting that Canadian oil resources will go to other parts of the world if the United States keeps dragging its heels on pipelines. “We’ve got to move on projects like Keystone.”
The Canadian government declined to comment on the U.S. approval. “That’s a U.S. decision,” Energy Minister Joe Oliver told reporters. “That company will, I’m sure, conduct themselves as good corporate citizens in Canada.”
OIL SANDS RESERVES
The Nexen acquisition gives CNOOC new offshore production in the North Sea, the Gulf of Mexico and off western Africa, as well as producing properties in the Middle East and Canada.
Canada approved the takeover late last year even though some members of the governing Conservative Party had misgivings about China’s human rights record.
But the federal government also insisted that CNOOC-Nexen was the last deal of its kind that it would approve, drawing a line in the sand against state-controlled companies taking majority stakes in Alberta’s strategic oil sands.
U.S. approvals took longer as legislators examined whether the deal would threaten U.S. national security.
The United States has traditionally been more wary than Canada of Chinese investment, prompting some speculation that Washington might want Nexen to dispose of the U.S. assets.
Nexen released the news on a day when Washington was focused on President Barack Obama’s State of the Union address, a nuclear test by North Korea, and deliberations in the Senate Armed Service Committee about a vote on Obama’s pick for Secretary of Defense. In China, lunar New Year celebrations were in full swing.Source: Reuters “CNOOC-Nexen deal wins U.S. approval, its last hurdle”
CNOOC-Nexen deal wins key U.S. regulatory approval (news.yahoo.com)
CNOOC’s $15.1-billion takeover of Nexen clears final regulatory hurdle (calgaryherald.com)
China’s oil thirst may wrench Canada’s rule of law – the global race for energy (chinadailymail.com)