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CP The Associated Press Archives China National Offshore Oil Co. vows to keep all current Nexen Inc. employees and management.

CALGARY -- A major Canadian oil company is being acquired by China National Offshore Oil Co. in a US$15-billion deal that, if successful, will be China's largest ever overseas acquisition.

With promises of making Calgary the base of its Western Hemisphere operations, plans to list its shares on the Toronto Stock Exchange, and vows to keep all current Nexen Inc. employees and management, CNOOC says its cash bid for Nexen shows "we are in Canada to invest."

"We intend to be a local company as much as a global one," CNOOC chief executive Li Fanrong told reporters on a conference call Monday.

The friendly deal is still subject to shareholder, regulatory and government approval -- and CNOOC says it reached out to the federal government ahead of Monday's announcement.

The Chinese state-owned company will base its North and Central American operations -- including $8 billion in existing CNOOC assets -- out of Calgary, said Li.

For years leading up to Monday's announcement, Nexen (TSX:NXY) had been a perennial subject of takeover speculation.

"I'm not sure why it took so long," said Lanny Pendill, an energy analyst with Edward Jones in St. Louis.

"I think the fact that the sector has really been beaten down with all of the macro concerns about economic growth and we've seen oil prices slip back a little here, from CNOOC's perspective it was probably now or never."

Nexen has faced numerous challenges over the past few years, including the troubled launch of its Long Lake oilsands project in northern Alberta in late 2008. The project has yet to come close to its design capacity of 72,000 barrels of bitumen per day due to a number of operational glitches, though performance has been improving in recent months.

Last week, the company reported that second-quarter profits tumbled nearly 57 per cent as it took a charge on an unsuccessful well in the Gulf of Mexico.

Late last year it was shouldered out of a major project in Yemen amid political strife in the Middle Eastern country.

CNOOC already had a 35 per cent stake in Long Lake after it took over Nexen's erstwhile partner Opti Canada Ltd. for $2.1 billion last year. The two companies also work together in the Gulf of Mexico.

So news that CNOOC is taking over Nexen in its entirety did not come out of the blue, said Wenran Jiang, a senior fellow at the Asia Pacific Foundation of Canada.

The $15.1-billion Nexen deal stands in contrast to CNOOC's $18.5-billion bid for U.S. energy company Unocal in 2005, which was ultimately nixed for political reasons.

"It was a surprise move and eventually it was rejected," said Jiang, noting Beijing-Ottawa relations have been warming in recent years and both the federal and Alberta governments have shown an openness to foreign investment.

"But this one has been incremental and has been, of course, in an environment that's most likely to go through."

Jiang said getting approval from the Canadian government may not the biggest challenge that lies ahead for CNOOC.

"A lot of people are focusing on the deal itself, which is large. It's noticeable. But I want to point out that the challenge is not really about the takeover approval process," he said.

Meanwhile, Talisman Energy is selling a 49 per cent interest in its U.K. division -- a source of much volatility for the Canadian company in recent years -- to Chinese firm Sinopec Corp. for $1.5 billion.

Calgary-based Talisman (TSX:TLM) said Monday it will continue to handle operations, while Sinopec will be able to appoint staff to key positions.

"Collectively, we will invest more in the U.K. than Talisman would have on its own, leading to a stronger, more sustainable business," said Talisman president and CEO John Manzoni.

-- The Canadian Press