A fortnight after blocking a C$5.17 billion Petronass-Progress Energy deal, Canada yesterday extended its review of the $15.1 billion takeover of Canadian energy producer Nexen Inc by China National Offshore Oil Corp (Cnooc) by a month to 10 December.

"The review period for CNOOC Limited's proposed acquisition of Nexen Inc under the Investment Canada Act has been extended to December 10, 2012," Canada's industry minister Christian Paradis said in a statement.

Paradis had earlier blocked a C$5.17 billion bid by Malaysia's state-owned oil firm Petronas for Calgary-based Progress Energy Resources on the grounds that the transaction did not represent a ''net benefit'' for the country.

Petronas has been given 30 days to appeal or make concessions to the deal.

In late July, CNOOC, China's state-owned company and the country's largest offshore oil producer, launched a $15.1 billion cash bid for Canada's sixth-largest oil producer Nexen. (See: CNOOC making China's largest acquisition with Canada's Nexen for $15.1 bn)

If the deal goes through, it would mark the largest ever overseas hydrocarbon acquisition by a Chinese entity.

The transaction has to be approved by regulators in Canada, the US, the EU (if required) and China.

It also has to be approved by the state government, which must show that the deal will bring in ''net benefit'' to the country.

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.

It also has a significant discovery at Appomattox in Mississippi Canyon blocks 391 and 392, containing at least 250 million barrels of contingent recoverable resource.

Appomattox is 20-per cent owned by Nexen, while the remaining is held by Shell - the operator of the blocks.

Analysts had speculated that Canada's rejection of the Petronas-Progress Energy deal had more to do with paving the way to block Cnooc-Nexen transaction, as Ottawa is vary of Chinese state run enterprises buying into energy resources in the country.

Both bids from the Asian state-owned oil firms stemmed out from joint-ventures with the Canadian companies, but the Chinese bid has created a heated political debate than the Malaysian one.

It would be extremely difficult for Canada to block the Cnooc-Nexen deal on ground that the transaction will not benefit Canada since only about 30 per cent Nexen's forecasted daily production for 2012 is from its Canadian operations, while the rest comes from outside the country, including from the North Sea.

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

Canadian Prime Minister Stephen Harper had at a recent news conference in Senegal said the CNOOC-Nexen deal raised national security concerns.

Although he did not elaborate, Canadian Security Intelligence Service (CSIS) had earlier this year raised questions in its annual report on foreign investment by overseas state-owned companies.

The CSIS did not name the countries, but said that certain state-owned firms have opaque agendas or received covert intelligence support in their investments in Canada.

The rejection of the Petronas-Progress Energy deal had not only shocked both companies, but also other overseas companies that would want to invest in the country's energy sector, which requires an estimated $660 billion in development costs over the next decade.

Recently, Canada has blocked a few deals in the natural resources sector – the largest being BHP Billiton's $39 billion bid for Potash Corp, the world's largest fertilizer company.

Citing unnamed government sources, several media had said that Ottawa wanted to approve the Petronas-Progress Energy deal but the government would have been on the back-foot while reviewing the controversial CNOOC-Nexen deal.