Canada’s Progress Energy Resources Corp said on Sunday it was disappointed with Ottawa’s failure to approve Malaysian giant Petronas’ acquisition bid, adding it would attempt to find a solution.
“Progress will be working over the next 30 days to determine the nature of the issues and the potential remedies” Progress president and CEO Michael Culbert said, acknowledging the company’s disappointment in the decision.
“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 [the one by] Petronas,” he said.
Canadian Industry Minister Christian Paradis said in a statement on Friday that he had sent a letter to Petronas indicating he was “not satisfied that the proposed investment is likely to be of net benefit to Canada.”
The deal is thought to be worth an estimated US$5.5 billion.
Paradis said the Malaysian group had 30 days to “make any additional representations and submit any further undertakings” for him to take into account in his final decision on whether to approve the acquisition.
Citing confidentiality provisions in the law governing such investments, Paradis declined to give further details.
The two energy firms signed a deal in June for the purchase, saying it was aimed at securing stable supplies of liquefied natural gas (LNG) from North America. However, the transaction still requires the government’s approval.
In Ottawa, Canadian Minister of Finance Jim Flaherty touched on the issue in an interview with CTV on Sunday, saying Canada could still approve the C$5.17 billion (US$5.22 billion) deal.
“I’m not involved in those discussions directly. The minister of industry is,” Flaherty said in an interview on CTV’s Question Period.
“I’m sure they’ll continue to work on it. There’s another period of time during which they can continue to have discussions and try to satisfy the concerns that the Department of Industry has,” Flaherty said.
The government’s announcement on Friday , minutes before a deadline, was a blow to Petronas, whose domestic oil supplies are shrinking and which has been seeking to boost its resources beyond Malaysia and volatile areas such as Sudan.
It also raises doubts over Chinese oil group CNOOC’s (中國海洋石油) C$15.1 billion offer for oil producer Nexen and could weigh on other Canadian firms hoping for foreign investment to tap their vast energy reserves.
Canada’s tar sands are the world’s third-largest crude oil reserve, behind only Saudi Arabia and Venezuela, while the country’s vast shale oil and gas deposits are still in the early stages of development.
The government has said the oil sands alone will require C$650 billion in investment over the next decade, much of which will have to come from foreign sources.