China Spends Record $15 Bil. for Canada's Nexon Energy
By wchung | 29 Apr, 2025

CNOOC’s $15.1 billion acquisition of Canada’s Nexon energy group Monday is China’s biggest foreign investment to date, raising China’s total stake in Canadian energy assets to about $50 billion.

The acquisition won approval in December from the Canadian government. It also had to secure the approval of the Committee on Foreign Investment in the United States (CFIUS) because Nexon’s assets included oil drilling within US jurisdiction in the Gulf of Mexico. That approval had been seen as a potential stumbling block because the $18.5-bil. bid by China’s state oil company in 2005 to buy Unocal had been rejected due to the vigorous opposition of Republican Oklahoma Senator James Inhofe who is a member of the Armed Services committee.

The deal was sweet for Nexon shareholders who received a $10-per-share premium over the last closing price before the deal was announced in July.

“We strongly believe that this acquisition is a good strategic fit for us and will create long-term value for our shareholders,” said CNOOC chairman Wang Yilin.

Nexon was Canada’s 10th largest oil company, producing the equivalent of 213,000 barrels of oil a day from Canada’s oil sands, Britain’s North Sea, Nigeria, the Gulf of Mexico and Colombia. It is headquartered in Calgary in Alberta province in western Canada. It has now become a subsidiary of state-owned CNOOC and will be retired from the Toronto Stock Exchange. Its CEO Kevin Reinhart will stay on as head of the subsidiary.

The deal generated debate and some soul-searching in Canada, which has become a leading destination for Chinese immigrants as well as investments. About 11% of Canada’s population of 34 million is Asian, with Chinese being the single largest group. Their concentration in Toronto and Vancouver makes their presence even more visible than if it were dispersed more evenly across Canada.

Yet Canada remains far more hospitable to Chinese investments than the US. So far China’s energy investments in the US come to just $3.5 billion or about 7% of its investments in Canada.

One reason is that Prime Minister Stephen Harper has actively sought out China’s investment in the Canadian mineral resources. Early last year when the Obama administration blocked the Keystone XL pipeline, Harper hinted that Canada would then have no choice but to sell Alberta’s oil sands output to China. The sale of Nexon to CNOOC may be a first step in making good on that threat.