(EnergyAsia, August 31 2012, Friday) — The Canadian government looks set to approve the takeover of Progress Energy Resources Corp by Malaysia’s state-owned Petronas, but stall over the application of China’s CNOOC Ltd to acquire Nexen Inc.

The different treatment meted out to two of Asia’s well-known state-owned energy companies reflects Ottawa’s evolving, cautious approach to dealing with the arrival of a new set of investors from across the Pacific Ocean.

Both companies are offering to pay hefty premius for their proposed Calgary, Alberta-based targets who own large hydrocarbons reserves in Canada, and in the case of Nexen, in Asia and Europe as well. Their boards and shareholders are eager to cash out out of their languishing investments as the companies have struggled to secure markets and complete projects amid rising cost.

But Ottawa is worried about national security and political backlash from citizens who fear the tide of Asian money and investors. Despite touting itself as a Pacific nation, Canada has long been tied to the US and is unfamiliar and reluctant to engage Asia.

The political and economic rise of Asia has forced the issue as businesses warn that Canada risks being left behind if it continues to stay aloof of the four billion people who live in the world’s fastest growing economic region.

The government of Prime Minister Stephen Harper is likely to approve Petronas Carigali Limited’s proposed C$22-per-share or C$5.9-billion bid for Progress Energy as the deal is viewed as bringing “net benefit” to Canada. Unlike China, Malaysia is also not as seen as a threat to Canadian national interest. (US$1=C$0.99).

Progress Energy said the sale is not being opposed by the federal government under the Competition Act, which requires major takeover deals to be of net benefit to Canada.

Petronas has received a “no action” letter from the commissioner of competition confirming who had reviewed the arrangement and concluded that “she does not intend to make an application for a remedial order under section 92 of the act,” said Progress, which is focused on natural gas exploration, development and production in British Columbia and Alberta provinces.

Petronas plans to produce natural gas for export as liquefied natural gas (LNG) to Asia through a terminal on Prince Rupert on the west coast of British Columbia.

Separately, Canada’s Industry Ministry said it has begun reviewing CNOOC’s proposed C$15.1-billion acquisition of Nexen Inc.

”I can now confirm that CNOOC has filed an application for review of its proposed acquisition of Nexen under the Investment Canada Act and I am conducting a review of the proposed investment,” said Industry Minister Christian Paradis. The initial review will take 45 days but could be extended by at least 30 days to determine if it is of net benefit to Canada.