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China took a major step into North Sea oil and gas production this weekend after one of the country's leading energy companies sealed a ￡9.5bn takeover of the Canadian giant, Nexen.
The Canadian government and the European Commission have approved the $15.1bn (￡9.4bn) takeover of Nexen by China National Offshore Oil Corporation (CNOOC), in a deal that has caused controversy in Canada over the foreign ownership of natural-resource assets.
The deal is China's largest-ever overseas energy acquisition and gives China control over 8pc of North Sea oil and gas production.
In addition to its Canadian assets, Nexen is the second-largest oil producer in the UK North Sea, pumping 114,000 barrels of oil equivalent per day (boepd).
It has a 43pc stake in the Buzzard field which is becoming increasingly important in setting global oil prices as output at other fields in the North Sea declines.
Brent crude prices are increasingly being used all over the world as the definitive global benchmark in deals, overtaking West Texas Intermediate (WTI), the US benchmark oil contract.
Nexen also has interests in the Ettrick/Blackbird field and Scott/Telford field and production platform.
"We are delighted that the Ministry of Industry has concluded that this transaction represents a 'net benefit' to Canada," Li Fanrong, CNOOC's chief executive, said on Saturday.
Other foreign deals involving Canadian natural-resources companies, such as BHP Billiton's proposed takeover of PotashCorp of Saskatchewan, have been derailed after failing this "net benefit" test under the country's foreign takeover rules.
Europe also waved through the takeover on Friday. "The European Commission has granted clearance under the EU Merger Regulation to the proposed acquisition," the EC said.
Its UK operations make up almost half of Nexen's total oil production. Although the UK Government is not directly involved in approving the deal, CNOOC may have to pass a test to see if it is "competent" as it will become the operator of the Buzzard field. It will also have to abide by UK rules and regulations.
China, through its state-owned companies, such as CNOOC and sovereign wealth funds, has been buying natural-resource assets all over the world to secure metals and energy sources to fuel its rapid growth and development.
In 2011, China accounted for half of the world's growth in oil consumption, according to data from the US Energy Information Administration.
The main contentious issue in Canada has been Nexen's operations in the Alberta oil sands. After allowing the takeover, Stephen Harper, Canada's president, said he would not approve state-owned companies taking controlling interests in any more oil-sands projects, except in "exceptional circumstances".
"To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead," Mr Harper said.
Canada gets about one third of its GDP from exports, the majority of which comes from energy. "These were difficult decisions" that reflect "the broad views of Canadians," Mr Harper said.
Unconventional natural gas has become a global hotspot. It is changing the pattern of the world energy. Shale gas will become one of the three energy resources in the next 20 years. Read More >
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