Petronas to renew Progress bid

Above, a Petronas petrol kiosk.

KUALA LUMPUR - Malaysian state oil firm Petronas will renew a bid for gas producer Progress Energy Resources, seeking to assure the Canadian government that the C$5.17-billion (S$6.3-billion) deal will benefit the country, according to Petronas sources.

Canada blocked the firm's bid for Progress this month, after Industry Minister Christian Paradis said it was not likely to bring a "net benefit" to the country. He gave Petronas 30 days to make additional representations to amend its bid.

The sources told Reuters that Canada wanted to approve the deal but was afraid that it would tie its hands when reviewing a more controversial US$15.1-billion (S$18.4-billion) bid by China's CNOOC for oil-and-gas company Nexen.

The two Petronas sources told Reuters yesterday that the firm agreed to the extension and was eager to complete the acquisition, despite the shock decision by Canada.

The Petronas board agreed to the extension at a regular monthly meeting, the sources told Reuters. The Malaysian firm is also studying additional steps to reassure Canada that the proposed acquisition will meet the net-benefit requirement, they added.

"Petronas will go all the way to secure this deal. It is important to Petronas that the deal is done," one of the sources said.

Spokesmen for Canadian Prime Minister Stephen Harper and Mr Paradis were not immediately available for comment.

Officials from Petronas and Progress held talks in Ottawa last week with Investment Canada, part of the country's industry ministry.

Canadian officials are drawing up new guidelines for investment by foreign state-owned companies, possibly complicating Petronas' attempt to improve its offer.

The sources said Canada was not keen on Progress being delisted from the Toronto Stock Exchange if the Petronas buyout was approved, due to concerns about accountability.

CNOOC has pledged to seek a listing of its own shares on the Canadian exchange, establishing international headquarters in Calgary and retaining Nexen's staff and capital spending.

"Progress is a much smaller deal than Nexen, (that) is the argument, and Petronas has promised to retain Progress staff," said the second Petronas source with direct knowledge of the deal.

"We need the expertise in unconventional oil and gas, but we now need to make changes to convince Canada."

Petronas officials said they would underline their plans with Progress under an existing joint venture to build an LNG export terminal on the Pacific coast.

Progress chief executive Michael Culbert has blamed a "communication breakdown" for Canada's rejection of the deal, and said he was optimistic that the deal would get back on track.

Mr Harper's office has declined to comment on whether CNOOC-Nexen derailed the Petronas-Progress approval, or if there had been any miscommunication between his government and the companies.

Two Petronas sources say the Malaysian firm is also studying additional steps to reassure Canada that the (deal) will meet the net-benefit requirement.

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