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CNOOC Ltd. and Nexen Inc. have extended a deadline to complete the $15.1-billion (U.S.) takeover of the Canadian oil and gas company as they await U.S. regulatory approval. The deal, the largest Chinese overseas takeover in history, was to have expired Jan. 31, 2012. The deadline has now been pushed back by 30 days, but the clock is ticking. Under the terms of the deal, it can only be extended 75 business days beyond Jan. 31.Jeff McIntosh/The Canadian Press

CNOOC Ltd. and Nexen Inc. have extended a deadline to complete the $15.1-billion (U.S.) takeover of the Canadian oil and gas company as they await U.S. regulatory approval.

The deal, the largest Chinese overseas takeover in history, was to have expired Jan. 31, 2012. The deadline has now been pushed back by 30 days, but the clock is ticking. Under the terms of the deal, it can only be extended 75 business days beyond Jan. 31.

The takeover has already cleared regulatory hurdles in Canada, the United Kingdom, the EU and China.

The major holdout is the U.S., where the Committee on Foreign Investment in the United States, or CFIUS, is examining the deal.

Part of the CFIUS mandate is to examine the impact of financial transactions to U.S. security. That review has been lengthy.

After an initial 75-day review window expired in November, Chinese state-owned CNOOC was forced to "pull and refile" its application, a move that triggered market concern.

In recent weeks, however, investors have acted with substantial confidence that the deal will be consummated, with Nexen's New York shares closing Friday at $26.97, not far from the $27.50 offer price.

About 12 per cent of Nexen's energy production comes from the U.S. Gulf Coast, a region that is one of the pillars of the company. Parts of it are also politically sensitive.

Though Nexen is a minority partner and non-operator in most of its U.S. offshore projects, it owns a number of leases that, thanks to a generous incentive program, are virtually royalty-free.

Observers have speculated that Nexen may be forced to divest some of those properties, although officials with CNOOC have, in the past, argued that the Gulf of Mexico is fraught with substantial risk, and will require large amounts of investment to develop.

Still, others have warned that CFIUS may be concerned about the proximity of some Nexen assets to areas used by the U.S. military.

They have also highlighted a potential reciprocity concern, given that U.S. firms face investment restrictions in numerous Chinese sectors.

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