China’s CNPC pulls out of Verenex Energy takeover

China National Petroleum Corporation (CNPC) has issued a notice of termination of the agreement for the acquisition of the Libya-focused Canadian oil and gas company, Verenex Energy (Verenex) following the refusal of consent for the deal by the Libyan authorities.

Earlier in February, CNPC through its wholly-owned subsidiary, China National Petroleum Corporation International (CNPCI) executed an agreement with Verenex to aquire all its outstanding shares at a price of C$10 per share and to also fund a C$47 million approval bonus to the Libyan National Oil Corporation (LNOC), amounting to approximately $460 million. (See: China National Petroleum to acquire Canada's Verenex Energy for $357 million)

Calgary-based Verenex Energy's primary operations in Libya's Area 47 in the Ghadames Basin, under an exploration and production sharing agreement with the LNOC, and its consent is required for any takevoer of Verenex, although such consent cannot be unreasonably withheld.

Verenex said, despite having complied with all the requirements of EPSA and LNOC throughout the public sale process, the LNOC has failed or refused to provide consent to the CNPCI agreement, stating its intent to purchase Verenex subject to approval of the General People's Committee (GPC), which acts as secretaries to various Libyan ministries.

Verenex is in discussions with Libyan authorities to reach an agreement on the sale of Verenex to a Libyan investment fund on acceptable terms. GPC said that it is seeking a negotiated lower price for the purchase.

Failure of the deal has cast shadows over Libyan promises to lure foreign investment into the country's energy sector, which brought in billions since 2005.