Since it was announced in July, state-owned CNOOC's offer for Nexen had triggered debates on whether Canadian oil and natural gas reserves should fall under foreign state control.
In addition to the CNOOC-Nexen deal, the Canadian government also announced on Friday the approval of Malaysian state company Petronas' $6.06 billion acquisition of Progress Energy Resources.
However, Canadian Prime Minister Stephen Harper said the decisions on "two foreign investment proposals," alluding to the CNOOC and Petronas deals, "are not the beginning of a trend, but rather the end of a trend."
He said the government has "determined that foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada."
Future bids for foreign state-control of the oil sands, Harper said, would only be granted in "exceptional circumstances."
But that position might not go over well in China, despite the Nexen approval, said Gordon Houlden, director of the China Institute at the University of Alberta.
"This will be a very mixed message for the Chinese," Houlden told The New York Times. "They had ambitions far beyond Nexen."
In 2005 CNOOC failed to win U.S. approval for its $18.5 billion bid to buy oil producer Unocal due to national security concerns.
With the Nexen deal, however, CNOOC "made all the right moves," said Neil Beveridge, oil and gas analyst at Bernstein in Hong Kong, in a Financial Times report.
"It says a lot about the experience and the improvement in the level of sophistication in the company over where it was five years ago when they bid for Unocal."
Conditions CNOOC agreed to include filing an annual compliance report to Industry Canada and investing "significant" capital in the Canadian energy sector. Earlier on, CNOOC had also said it would retain Nexen staff and move its North American headquarters to Calgary.
As a result of the Nexen acquisition and CNOOC's own growth, the Chinese company's estimated production could increase by 33 percent and it could experience a 19 percent boost in earnings, Credit Suisse says, Platts reports. Also, for its domestic reserves, CNOOC could benefit from Nexen's expertise in shale gas and deepwater exploration.
CNOOC is "very pleased" by the approval, "which recognizes the long-term economic benefits for Calgary, for Alberta and for Canada," CNOOC Chairman Wang Yilin said in a statement.
CNOOC will also benefit "by adding Nexen's impressive assets and outstanding employees to our worldwide operations," Wang said.