Business

Petronas bid for Progress Energy Resources blocked

  • 22 October 2012
  • From the section Business

Canada has blocked a $5.2bn(£3.3bn) takeover bid from Malaysia's Petronas, saying it would not benefit the country.

Petronas had wanted to buy Canadian oil and gas firm Progress Energy Resources. It now has 30 days to adjust its offer.

Analysts said the move raises questions about Canada's appetite for foreign investment in key industries.

The decision also casts doubt over a $15.1bn (£9.3bn) bid for Canada's Nexen by Chinese state-owned Cnooc.

"If they can reject Petronas it doesn't look good for Cnooc," said Laban Yu, energy analyst at Jefferies in Hong Kong.

International investment

The offer from Petronas for Progress Energy Resources, worth 5.18bn Canadian dollar, was agreed by the companies in June.

However, in a statement on Friday the Canadian industry minister said the deal was not of "net benefit" to Canada.

A takeover would give Petronas access to shale gas reserves in the Montney region of British Columbia and Alberta, a resource many firms are keen to develop.

Chief executive of Progress Energy Resources, Michael Culbert, expressed the company's disappointment at the decision.

"Progress will be working over the next 30 days to determine the nature of the issues and the potential remedies," he said.

"The long-term health of the natural gas industry in Canada and the development of a new liquefied natural gas export industry are dependent on international investments such as (the one by) Petronas."

Petronas would not comment on the decision when contacted by the BBC.

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