Petronas deal blocked by federal government

Natural gas producer Progress Energy Resources was disappointed Friday after the federal government rejected a Malaysian state-owned energy giant’s proposed takeover bid for the Calgary company.

Malaysia’s Petronas is offering $6 billion in its attempt to takeover Progress, but Industry Minister Christian Paradis refused to approve the transaction after a detailed review.

The minister said Friday he informed Petronas he was “not satisfied that the proposed investment is likely to be of net benefit to Canada.”

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Under the Investment Canada Act, Petronas has up to 30 days to make changes to the proposed deal and send it back to Ottawa for another review.

“Progress will be working over the next 30 days to determine the nature of the issues and the potential remedies,” said company president and CEO Michael Culbert.

“The long-term health of the natural gas industry in Canada and the development of a new (Liquefied natural gas) export industry are dependent on international investments such as Petronas’.”

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The federal government has not provided any further explanation on its rejection of the Petronas deal, but Paradis has highlighted Canada’s “long-standing reputation for welcoming foreign investment.”

“The Government of Canada remains committed to maintaining an open climate for investment,” he said Friday.

Progress focuses primarily on natural gas exploration, development and production in northeast British Columbia and northwest Alberta.

A year before their acquisition deal was announced, Progress and Petronas formed a partnership to jointly develop shale natural gas in northeastern B.C. They also looked at exporting the gas off the West Coast in liquid form.

The government’s is also in the process of reviewing another Asian takeover offer, as China National Offshore Oil Co. is offering $15.1 billion for Calgary-based Nexen Inc.

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Observers had been looking to the Petronas review for signals on the Harper government’s thinking about the more controversial deal to sell Nexen to a company controlled by China’s government.

Read: Should Canadians be scared of China? And Government to review Nexen takeover

In other news, a group of 49 investors is pushing for companies operating in the Canadian oil sands to improve their environmental performance, reports Financial Times.

The investors—who have more than $2 trillion under management—are pressuring major companies like BP and Royal Dutch Shell to restrain their greenhouse gas emissions and water use.

Read: Rethinking renewable energy