Once finalized, it will be China's largest overseas energy acquisition, coming at a time when other Chinese companies such as telecommunications giant Huawei are encountering difficulties in expanding in North America, Europe and Australia.
Wang Yilin, chairman of China National Offshore Oil Co., said the approval is recognition of the acquisition's long-term economic benefits for Calgary, Alberta and Canada.
Nexen is headquartered in Calgary in Canada's Alberta province and is to remain there after CNOOC's takeover as its head office for north and central American operations.
"I express my appreciation for Canada's welcome of our investment," Wang said in a statement Saturday.
CNOOC Chief Executive Officer Li Fanrong said the takeover will bring opportunities for Nexen employees, partners and CNOOC. "We are delighted that the Ministry of Industry has concluded that this transaction represents a 'net benefit' to Canada," he said.
China's Ministry of Commerce could not be reached for comment Saturday.
Despite the approval, the Canadian government said it will reject any future takeovers in the oil sands sector by foreign state-owned companies unless there are exceptional circumstances.
"To be blunt, Canadians have not spent years reducing ownership of sectors of the economy by our own governments only to see them bought and controlled by foreign governments instead," Canadian Prime Minister Stephen Harper said.
In 2005, U.S. lawmakers blocked a CNOOC $18.5 billion bid to buy the oil company Unocal over national security concerns.