Canada yesterday finally approved the $15.1-billion acquisition of Nexen Inc by China's state-owned Cnooc Ltd, but vowed to block nearly all future prospective deals by state-owned enterprises in the country's rich oil sands.

The closely watched deal, China's biggest ever overseas acquisition, has yet to be approved by regulators in the US and the UK, since Nexen has significant assets in these two countries.

Observers had expected Canada to veto the takeover, especially after the regulator had in October rejected Malaysia's state-owned oil company Petronas $5.2 billion bid for Progress Energy. Canada yesterday also approved this deal after Petronas submitted a revised bid.

Canadian Prime Minister Stephen Harper, who had come under fire from the opposition and some members of his own Conservative party, said Canada would only consider future acquisitions in the oil sands by state-owned companies in exceptional circumstances.

Harper did not say under what exceptional circumstances the Cnooc-Nexen deal was approved, especially after China had backed off from making big ticket resource deals in Canada fearing that they would be rejected.

In 2010, Chinese state-owned chemical company Sinochem, deliberately did not table a counter offer for Potash Corporation of Saskatchewan for similar reasons. In that deal, Canada had rejected Anglo-Australian miner BHP Billiton's $38.6 -billion cash takeover bid for the world's largest fertilizer company.

But Cnooc was willing to accept any demands made by the Canadian regulator in order to see the deal through.

Last month, it ceded to the demands made by Alberta Premier Alison Redford on guarantees that at least 50 per cent of Nexen's board and management post be held by Canadians.

It also pledged to set up a regional headquarters in Calgary, Alberta, where Nexen is based, and list the company on the Toronto Stock Exchange.

Some observers had opined that it would be extremely difficult for Canada to block the deal on the ground that the transaction would not benefit Canada since only about 30 per cent Nexen's estimated daily production for 2012 is from its Canadian operations, while the rest comes from outside the country, including from the British part of the North Sea.

The acquisition will expand Cnooc's overseas businesses and complements its large offshore production footprint in China. It also extends its global presence with a high-quality asset base in many of the world's most significant producing regions focused on conventional oil and gas, oil sands and shale gas.

Both companies are familiar with each other, having formed a joint venture late last year, which gave Cnooc a stake in up to six deepwater exploration wells in the Gulf of Mexico.

Nexen has operations in the oilsands, natural gas region of Western Canada and in the Gulf of Mexico, North Sea, Africa and the Middle East.

The company had 900 mmboe of proved reserves and 1,122 mmboe of probable reserves as of 31 December, 2011, and produced an average of 213,000 barrels of oil equivalent a day in the second quarter of this year.

Nexen currently produces approximately 20,000 barrels of oil equivalent per day in the Gulf of Mexico and is one of the top leaseholders in the deepwater Gulf.

Nexen has recently been looking for partners to fund the development of its oil and gas assets. Late last year, it sold a 40-per cent stake in its northeast British Columbia shale gas assets to Japan's Inpex Corp led consortium, for C$700 million ($678.7 million).

Oil sands are deposits of heavy oil, or bitumen, found in sand and clay, which requires treating and upgrading for use in refineries to produce gasoline and diesel fuels.

Cnooc has already invested C$2.8 billion in Canada since 2005, which includes a stake in MEG Energy, OPTI Canada, and a 60 per cent interest in Northern Cross (Yukon) Ltd.

China has been scouting for oil and mineral assets around the globe and its oil companies have recently invested more than C$18 billion through joint ventures and partial stakes in the Alberta oil sands region, the largest known crude deposit outside the Middle East.