Canada blocks Petronas' $6.38b bid for Progress Energy

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Canada blocked Malaysian state oil company Petronas' US$5.22 billion (S$6.38 billion) bid for gas producer Progress Energy Resources Corp on Friday, a surprise ruling that could have implications for a much bigger offer by China's state-owned CNOOC for oil producer Nexen Inc.

"I can confirm that I have sent a notice letter to Petronas indicating that I am not satisfied that the proposed investment is likely to be of net benefit to Canada," Christian Paradis, Canada's minister of industry, said in a late-night statement.

Petronas has up to 30 days to make additional representations that could make its deal more palatable. Petronas said it was not ready to make any comment.

Some experts suggested Petronas would need to provide a stronger set of undertakings due to the additional attention on their deal following CNOOC's proposal.

It was the second time in two days that Canadian authorities had intervened to prevent one company taking over another.

Progress produced 44,641 barrels of oil equivalent per day in the second quarter. However its most valuable asset is 800,000 acres of exploration lands in the Montney shale-gas region of northeastern British Columbia.