Chinese oil firm in biggest takeover

CHINA'S dominant offshore oil producer has completed a US$15.1 billion acquisition of Canada's Nexen Inc, winning a key international platform for its global expansion.

The closing of China's largest overseas takeover comes seven months after it was first announced.

CNOOC Ltd's acquisition of Nexen, which has oil sands and shale gas in western Canada and conventional exploration and development in the North Sea and the Gulf of Mexico, will increase the Chinese firm's production by 20 percent and its proven oil and gas reserves by 30 percent.

Yang Hua, CNOOC's vice chairman, said Nexen was attractive because it had a diversified product portfolio and the majority of its assets were in politically stable regions.

CNOOC, which failed in its US$18.5 billion bid for Unocal Corp in 2005 due to the United States' political opposition, started to track Nexen as a potential target the same year, Yang told Xinhua news agency.

In 2011, CNOOC acquired struggling Canadian oil sands producer OPTI, becoming a partner with Nexen in the Long Lake project in Alberta. The OPTI deal paved the way for the Nexen acquisition, Yang said.

Moody's Investors Service said the ratings and stable outlooks of CNOOC and its parent will remain unchanged after the closing of the Nexen deal.

Senior analyst Simon Wong said the acquisition would "strengthen CNOOC Ltd's position as one of world's largest independent exploration and production companies and further diversify its product portfolio, in spite of its weakened credit metrics."

Canada granted its approval in December after CNOOC agreed to various conditions. CNOOC made commitments regarding transparency, disclosure, commercial orientation, employment and capital investment that "demonstrate a long-term commitment to the development of the Canadian economy," Canadian authorities said.

But Ottawa indicated this was the last deal of its kind it would approve by saying it wouldn't allow foreign state companies to control the nation's oil sands.

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