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Tuesday, December 11, 2012

Britain’ll not block Nexen-CNOOC deal — Official

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Britain'll not block Nexen-CNOOC deal — Official
Dec 11th 2012, 23:00

LONDON: Britain will not stand in the way of a $15.1bn takeover of Nexen by CNOOC, allowing the Chinese company to snap up the Canadian group's stake in a major North Sea field that helps set the Brent global oil benchmark.

While Canada approved the deal on Friday, Nexen's chief executive said on Monday China's biggest ever foreign takeover was nowhere near done, according to Reuters.

A further decision on the transaction rests with a United States foreign investment panel which gets a say because Nexen has exploration and production assets in the Gulf of Mexico.

Britain's clearance of the deal is also important because Nexen has 43 per cent of the Buzzard oilfield, Britain's largest and pumping about 200,000 barrels per day.

"We will not stand in the way," Mike Hawkins, head of oil and gas license administration at Britain's Department of Energy and Climate Change, told Reuters.

"The license does not change, no formal approval is needed," he said, adding the department has had discussions with CNOOC and Nexen.

Analysts and traders have long noted China's growing appetite for North Sea oil, which is key to determining global prices.

In addition to the CNOOC-Nexen deal, China's top refiner Sinopec is also buying 49 percent in the United Kingdom unit of Talisman for $1.5bn.

Wood Mackenzie consultancy estimated both firms would directly own 13 per cent of all UK liquids production if both deals went through.

Including production, which Nexen and Talisman operate, the two handle around 300,000 bpd, according to Reuters calculations, or almost a third of the dwindling UK North Sea oil output.

Oil from Buzzard, although only 0.2 per cent of global supply, plays a crucial role in setting prices because it is the largest contributor to the Forties oil blend, one of four North Sea crude streams making up the Brent oil benchmark.

Forties usually sets the value of dated Brent, a benchmark used for pricing more than half of the world's crude, including oil from Africa, Europe, Asia and the Middle East. Dated is part of the underlying market for Brent crude futures.

China buys about 2 million bpd of crude priced off dated Brent, including West African crudes.

In a statement released early on Saturday, Nexen and CNOOC said the deal's closing remained subject to "the receipt of other applicable government and regulatory approvals."

On Monday, a source familiar with the matter highlighted the ruling by the Committee on Foreign Investment in the United States, or CFIUS, led by Treasury Secretary Timothy Geithner, as the main regulatory decision still remaining.

In late November, CNOOC and Nexen said they withdrew and resubmitted their application for CFIUS approval and discussions with the committee were taking place "with a view to completing the CFIUS review process as expeditiously as possible."

The panel has the power to negotiate or impose conditions, including divestitures and security-control agreements to mitigate any national security threats, possibly forcing the combined company to sell interests in the Gulf.

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