This was the month that China's quest for a consistent energy supply from Canada (a quest that would put competitive pressure on Australian LNG) was supposed to be cemented by the Canadian government. Approval of China’s state-owned CNOOC Ltd's $C15.1 billion ($A14.6 billion) bid for Nexen Inc. would amount to China's largest-ever foreign acquisition.

But China has put the bubbly on ice. The Canadian government pushed back the November 9 deadline for a ruling on the bid to December 10, citing a need for more time to review the takeover.

CNOOC agreed to the Canadian government's extension, but there are growing signs that Canada's efforts to swim up the middle of this river – by portraying the country as open to foreign acquisitions, without angering those who are wary of Chinese investment, and those uneasy about straying from Canada's traditional trading partner, the United States – are likely to sink.

In Canada, China sees a country with the potential to compete with Australia as an Asian energy supplier, but the size of the CNOOC bid, and the government's handling of it, has revealed the difficulty Canada has in managing Chinese investment in its energy sector.

With the clock ticking on the bid, Canada has rushed to ink an investment treaty with China, negotiate reciprocal investment rights for Canadian companies in China and prepare itself for an expected rush of Chinese investment in Canada's resources sectors if the CNOOC bid is approved.

In essence, Canada is trying to write its own Asian Century white paper on the fly, with a multi-billion dollar investment offer hanging in the balance.

The outcome of the Nexen bid, and its impact on China's relationship with Canada, matters to Australia. Aside from the prospect of fast-rising investments in Canada's oil sands, China is eager to expand its energy relationship with Canada to LNG, which could compete with Australia's LNG export sector.

But even on that front, delays may undermine Canada's prospect of competing with Australia. There are five proposed LNG projects slated for Canada's west coast, intended to eventually liquefy and export nine billion cubic feed per day of LNG – much of it to Asia. But only three of those projects might be built by 2020, leaving Canada limited in its ability to capitalise on growing Asian LNG demand in a fast-changing market.

Canadian Prime Minister Stephen Harper's foreign investment profile was not helped by the rejection last month of a $C5.2 billion takeover bid by Malaysian state-owned oil company Petronas for Progress Resources Energy Corp on the basis that the deal did not pass the net-benefit test (the same test that will be applied to the CNOOC bid).

Petronas had been so confident that the deal would be approved that it had drafted a press release announcing the successful bid. But Canadian officials were reportedly concerned that an approval of the Petronas bid would tie the government's hands on the CNOOC bid, and that back-to-back approvals of large takeover bids by Asian state-owned companies would open the floodgates.

CNOOC, Sinopec and other firms have already told the Canadian government that they plan to expand investments in Canada's potash, fertiliser and timber sectors as well.

Last week, at an annual Canada-China Forum on Energy and the Environment in Beijing, Canada got a glimpse of the growing frustrations in Asia.

A CNOOC official at the forum suggested that Canada's energy sector is at risk of being left behind if it doesn't stop dragging its feet, including the question of whether a proposed oil pipeline will be built connecting Canada's oil sands to the west coast for export to Asia.

"It's the same situation as the leftover single women ... It will be the same for the oil sands, they will be outdated just like unmarried single women," Chen Weidong, the chief energy researcher at the CNOOC Energy Economics Institute told the forum, according to The Globe and Mail newspaper.

The comments, tactless as they may be, illustrate Canada's seeming struggle to reconcile a desire to expand its Asian trading and investment relationship with a deep-seated distrust of the region, especially China, and uncertainty about the impact of expanded Asian trade on its relationship with the US.