Cnooc, China’s largest offshore oil and natural gas producer, was barred from controlling Gulf of Mexico assets under U.S. terms for approving its $15.1 billion purchase of Nexen, people familiar with the matter said.
Through its takeover of Calgary-based Nexen, Cnooc acquired about 200 deep-water leases in the Gulf with reserves equivalent to about 205 million barrels of oil, one of the largest holdings in the Gulf, according to Nexen’s website. The state-owned Chinese oil explorer surrendered operating control of those assets to quell U.S. national security concerns, said two people familiar with the agreement who asked not to be named because the terms aren’t public.
Cnooc will still own the assets, according to the people.
Patti Lewis, a spokeswoman for Nexen, declined to comment on the specifics of the CFIUS approval. Steven MacKinnon, a spokesman for Cnooc based in Ottawa, also declined to comment.
“We can’t get into the elements of the deal for confidentiality reasons, both with respect to the contract with the government, but also from a business perspective,” Kevin Reinhart, Nexen’s chief executive officer, said in a meeting with reporters in Calgary on Feb. 27. It “took awhile” to find “common ground” with the U.S., Reinhart said.
The transaction, which closed Feb. 25, spurred the Canadian government to say future acquisitions in the oil sands by state- owned foreign companies would be rejected barring “exceptional circumstances.” Cnooc’s previous attempt to gain control of U.S. oil and gas assets also failed, as the company abandoned its bid for Unocal Corp. in 2005 after facing political opposition in Washington.
Nexen said on Feb. 12 it had received approval from the Committee on Foreign Investment in the United States for its takeover by Cnooc without specifying any conditions.