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CNOOC answers the question: 'What's next?'

Updated: 2013-04-16 07:58
By Zhang Yuwei (China Daily)
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The Chinese offshore oil producer also has agreed to build on Nexen's existing community and charitable programs, particularly to First Nations (Canada's indigenous peoples) and local communities.

CNOOC - the world's largest dedicated exploration and production company by market capitalization - will absorb Nexen's $4.3 billion debt.

CNOOC's CEO Li said the deal is worth the price.

"We did not overpay for it, but, rather, we paid the right price," Li told the Shanghai Securities News, adding that the asset is in accordance with CNOOC's "long-term strategy, and the price conforms to the level of the industry."

The two companies had formed a relationship before they announced the deal. In 2011, CNOOC acquired Opti Canada Inc, Nexen's partner in the Long Lake oil-sands project. That year, the two set up a joint venture in the Gulf of Mexico, which gave CNOOC a working interest in up to six deep-water exploration wells in the Gulf.

CNOOC's Li said following the Nexen acquisition that the company will focus on developing the "full potential of Nexen's resources" and will refrain from any big deals in the oil patch "in the very short term". He said that CNOOC won't develop shale gas in the near future as some speculated.

Canada gets fund

Canada has been a popular investment destination for major Chinese oil and gas companies. Until the Nexen deal, CNOOC had invested $2.7 billion in Canada since 2005.

With its rich natural resources, the country has attracted an average of $12 billion annually in the past three years, according to the Bank of Montreal. With the Nexen deal, China's investment in Canada will have surpassed $25 billion in 2012, according to the bank, making China the fifth-largest foreign investor.

With a population of slightly more than 1 million, Calgary, situated on Bow River in the south of Alberta, has had many foreign investments in oil and gas projects in particular.

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