The federal government has rejected a $6 billion bid by Malaysia鈥檚 Petronas to take over Calgary natural gas producer Progress Energy Resources Corp., although the company has 30 days to revise and resubmit its offer.
In a statement released at 11:57 p.m. Friday, Industry minister Christian Paradis said a notice letter was sent to Petronas explaining the proposed investment was not likely to be of net benefit to Canada.
鈥淚 came to this decision after a careful and thorough review of the proposed transaction,鈥� Paradis wrote in the statement, adding that he would not make any further comment on his decision.
Under the Investment Canada Act, Petronas will have up to 30 days to make adjustments to its bid. Paradis can extend the allotted time.
If the proposed investment is resubmitted to Ottawa, Paradis said he will either confirm his initial decision or approve the acquisition.
鈥淐anada has a long standing reputation for welcoming foreign investment. The Government of Canada remains committed to maintaining an open climate for investment,鈥� Paradis wrote.
Ottawa agreed to extend the review of the proposed takeover by Petronas on Oct. 5, allowing the government to reach a decision by Oct. 19.
Petronas and Progress entered a partnership last year after a joint decision to develop shale natural gas in northeastern B.C. The joint venture was aimed at exporting gas off the West Coast in liquid form.
In a statement released late Saturday, Progress said it was 鈥渄isappointed鈥� in the decision.
"Progress will be working over the next 30 days to determine the nature of the issues and the potential remedies" Michael Culbert, Progress鈥� president and CEO, said in the statement.
"The long-term health of the natural gas industry in Canada and the development of a new LNG export industry are dependent on international investments such as Petronas鈥�."
Friday鈥檚 decision coincided with the ongoing review of a bid by another Asian-based firm, China National Offshore Oil Co., or CNOOC, which is vying to buy Nexen. The review of the proposed $15.1 billion takeover of the Calgary oil company has been extended until mid-November.
Political scientist Wenran Jiang told The Canadian Press that the biggest challenge for Ottawa will be to show consistency in how it applies the Investment Canada Act鈥檚 key net benefit test to foreign deals.
鈥淭hey will have to appear that they use the same set of rules to evaluate, rather than using different tailor-made rules,鈥� said Jiang. 鈥淭hey will have to show some seriousness as well as consistency.鈥�
Analyst Rob Warren said the Chinese government is likely watching the Petronas-Progress situation very closely.
鈥淚t gives Chinese partners cause to pause and think about what鈥檚 going on,鈥� Warren told 麻豆传媒. 鈥淎nd they鈥檙e going to want to find out what was really behind the decision, and is it going to have an impact on what they鈥檙e doing, as well.鈥�
The NDP has urged the Conservatives to reject the Nexen bid, citing concerns over national security, as well as environmental safety and human rights.
NDP natural resources critic Peter Julian called out the federal review process for being too secretive.
鈥淎 decision made at midnight on a Friday night is not one designed to enhance public confidence in the process, and enhance transparency,鈥� he said.
With a report from CTV鈥檚 Richard Madan
