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Chinese energy giant CNOOC Ltd. (CEO - Analyst Report) has cleared the final obstacle for its acquisition of the Calgary, Alberta-based energy producer Nexen Inc. . The deal price is approximately $15.1 billion in cash.

CNOOC has already received the regulatory approvals in Europe and Canada. However, it needed the U.S. approval as Nexen has operations in the country. Now, the Committee on Foreign Investment in the United States (CFIUS) had finally given its green signal. The deal is expected to close around Feb. 25, seven months after China’s biggest offshore oil and gas producer made its bid of $27.50 a share.

Although the CFIUS approval is likely to be viewed as a positive development for CNOOC, it came on the heels of deeper concerns and further discussions. One of the U.S. legislators planned to bring in legislation to obstruct any future transaction, like the Nexen one, involving the transfer of royalty-free leases.

Again, one of the representatives of the House Natural Resources Committee, Edward Markey, said that Chinese oil corporations must not be allowed to drill in the U.S. Gulf of Mexico region without giving any royalty to the country’s taxpayers.

However, this deal marks a significant milestone for CNOOC as it gets hold of Nexen’s biggest reserves in the Canadian oil sands. Calgary, Alberta-based Nexen operates in western Canada, the Gulf of Mexico, North Sea, Africa and the Middle East. Apart from oil sands, Nexen remains dynamic in natural gas exploration in shale rock formations. It owns approximately 300,000 acres of shale-gas blocks in the Horn River Basin in British Columbia.

As the world's second-largest economy, China has a huge energy requirement. The Nexen acquisition bid foregrounds not only a bold attempt by CNOOC but also of other Chinese biggies to make deeper inroads into the international energy markets with the specific aim of meeting domestic demand. We note that the CNOOC bid for Nexen marks the biggest Chinese takeover attempt so far.

Recently, another Chinese energy giant China Petroleum & Chemical Corp. (SNP - Analyst Report), aka Sinopec, planned to acquire international upstream oil and gas assets from its parent company, China Petrochemical Corp., or Sinopec Group, in order to spread its footprint globally. In this regard, Sinopec is eyeing assets in countries such as the U.K., Russia, Colombia and Kazakhstan.

The transaction – expected in April this year – would position Sinopec on the same platform with other international energy giants like ExxonMobil Corp. (XOM - Analyst Report).

CNOOC currently retains a Zacks Rank #3 (short-term Hold rating).

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