CNOOC to buy Nexen in $15bn deal

China's CNOOC wants to boost its domestic oil reserves

China's biggest offshore oil producer CNOOC is poised to snap up Canadian rival Nexen in a $15.1bn (£9.7bn) deal.

If approved the deal would mark China's largest foreign business takeover.

State oil firm CNOOC has offered to pay $27.50 cash per share for Nexen, which is 60% higher than Friday's closing share price.

The board of Nexen has already approved the deal, but the takeover still needs to be cleared by the Canadian government.

CNOOC, which already operates a number of joint ventures with Nexen, said the deal would boost its oil reserves by 30%.

The deal marks CNOOC's third Canadian investment. In 2005, it spent 122m Canadian dollars (US$120m; £77m) on a 16.7% share of oil sand developer MEG Energy. And last November, CNOOC bought Canadian oil sands firm Opti Canada for C$2.1bn.

"CNOOC has been seeking overseas acquisitions, as the domestic reserves are limited," said Yan Shi, oil analyst at Chinese brokerage UOB Kay Hian.

However, the Canadian government, which has the right to block any foreign investments over C$330m if it believes they are not in Canada's best interests, could yet veto the deal.

In 2005, CNOOC's attempt to buy US-based Unocal was blocked due to a political backlash.

And in 2010, the Canadian government blocked mining firm BHP Billiton's $39bn attempt to make a hostile takeover of fertiliser firm Potash Corp.