OTTAWA - Prime Minister Stephen Harper is promising to issue new guidelines on foreign takeovers amid growing unease over the government's surprise rejection of a Malaysian state-owned oil company's bid for a Canadian resource firm.

The prime minister said Monday that new guidelines will be issued "soon" and that most applications would be accepted.

The statement comes as markets roiled over the Friday night rejection of the $6-billion takeover offer of natural gas producer Progress Energy Resources by Malaysia's Petronas, and what the decision might portend for the $15.1-billion proposal by a Chinese state-owned company to acquire Nexen Energy.

Progress (TSX:PRQ) shares fell hard at market opening and were still down about nine per cent at close Monday. Nexen shares also fell, almost five per cent, on speculation Ottawa may also play hard ball against China National Offshore Oil Co.

Reports say the government waited until the last minute, just before the midnight deadline, to announce the decision because it wanted a second 30-day extension on its review, but Petronas refused permission.

"We do not have a time scheduled, but soon the government will create a new framework for these investments," Harper told reporters in French at a news conference. "Within that framework that will come out soon, we will be able to welcome the overwhelming majority of investments."

He was less clear in English, saying that Ottawa "will give greater clarity on our policy framework when we take a couple of decisions that are before us at the present time."

Progress and Petronas said Monday they're meeting with Industry Canada officials to "better understand" what the government's requirements are with respect to the deal.

Industry Minister Christian Paradis said the government was "not satisfied" that the acquisition would bring a "net benefit" to Canada, but said Petronas has 27 days to come back with a better offer.

The minister would offer no other explanation, but trade lawyer Lawrence Herman of Cassels Brock in Toronto said he believes Petronas failed to convince Ottawa it would operate under market principles and not as arm of the Malaysian government.

"This is a very significant decision. It draws a line in the sand and says to any state-owned investor, 'If you want to come into Canada, we expected (you) to operate in accordance to free market principles in terms of corporate governance, decision-making and commercial operations,' " he said.

The proposed Nexen purchase by CNOOC may be different, he added, because among other aspects, CNOOC is traded on the New York Stock Exchange.

The federal government has pledged to clarify how it applies the "net benefit" test in the Investment Canada Act before, particularly after its controversial decision to block a foreign takeover of Potash Corp. in 2010. But after the furor died down, it did not follow through.

Canadians have every reason to be skeptical of the latest promise, said NDP natural resources critic Peter Julian.

"They simply have no credibility," he said. "That is why public confidence is eroding ... and it's fair to say potential investors are losing confidence too."

Liberal interim leader Bob Rae agreed the government's actions send a "terrible signal to the world as to how we do business as a country.

"We’ll see what happens now with respect to this investment and also with the Nexen investment (but) we’ve been asking since 2010 and the government has committed since 2010 that they would bring forth clearly set out criteria."

Herman said the lack of clarity about how Ottawa judges whether an acquisition is in Canada's interest, particularly when it involves state-owned enterprises, could be dampening investments Ottawa says are needed to grow the economy. He said the government needs to come to grips with the reality that they will be facing many more applications from state-owned enterprises.

"If you are courting China and other parts of Asia, you've got to expect a lot of these will come through state-owned enterprises," he said.

After years of rubber-stamping applications, Canada has now turned down three applications in four years — proposals to acquire Potash Corp., MacDonald, Dettwiler and Associates, and now Progress Energy, although the latter can still be salvaged.

On the surface at least, that is antithetical to repeated pleas to foreign investors to help develop Canada's bountiful mineral riches. In the fall, Natural Resources Minister Joe Oliver said Canada needed an “immense amount of capital” to develop resources and get them to global markets.

But on Monday, Oliver said he did not believe the Petronas decision would discourage investors.

"I think everybody understands we have legislation in place. Canada is open for business and we have approved a great number of investments," he said.

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  • 9. Oil Exports Have Grown Tenfold Since 1980

    Canada exported some 12,000 cubic metres of oil per day in 1980. By 2010, that number had grown to 112,000 cubic metres daily. Source: <a href="" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 8. Refining Didn't Grow At All As Exports Boomed

    Canada refined 300,000 cubic metres daily in 1980; in 2010, that number was slightly down, to 291,000, even though exports of oil had grown tenfold in that time. Source: <a href="" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 7. 97 Per Cent Of Oil Exports Go To The U.S.

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  • 5. Two-Thirds Of Oil Sands Bitumen Goes To U.S.

    One-third of Canada's oil sands bitumen stays in the country, and is refined into gasoline, heating oil and diesel. Source: <a href="" target="_hplink">Natural Resources Canada</a>

  • 4. Alberta Is Two-Thirds Of The Industry

    Despite its reputation as the undisputed centre of Canada's oil industry, Alberta accounts for only two-thirds of energy production. British Columbia and Saskatchewan are the second and third-largest producers. Source: <a href="" target="_hplink">Natural Resources Canada</a>

  • 3. Alberta Will Reap $1.2 Trillion From Oil Sands

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  • 2. Canadian Oil Consumption Has Stayed Flat

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  • 1. 250,000 Jobs.. Plus Many More?

    The National Energy Board says oil and gas employs 257,000 people in Canada, not including gas station employees. And the Canadian Association of Petroleum Producers says the oil sands alone <a href="" target="_hplink">will grow from 75,000 jobs to 905,000 jobs by 2035</a> -- assuming, of course, the price of oil holds up.

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  • June 18, 2012 -- Elk Point

    Enbridge Inc.'s <a href="" target="_hplink">Athabasca pipeline leaked an estimated 230,000 litres of oil</a> about 24 kilometres southeast of Elk Point, Alberta. <br></br> A member of Greenpeace cleans up a mock oil spill outside the Enbridge Northern Gateway pipeline office in downtown Vancouver, Wednesday, June 13, 2012. The mock spill was set up by Greenpeace to show the risks of spills similar to the recent one outside of Red Deer, Alberta. THE CANADIAN PRESS/Jonathan Hayward

  • June 18, 2012 -- Elk Point

    Although the spill didn't leak into any waterways, Energy Resources Conservation Board's Darin Barter said the<a href="" target="_hplink"> spill was considered "significant" in size</a>.<br></br> "Any amount of crude oil out of a pipeline is significant to us. Obviously we've had a number of pipeline incidents in the past short while and we're monitoring cleanup on them and we have a number of investigations underway."

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  • June 7, 2012 -- Red Deer River

    Some of the oil <a href="" target="_hplink">seeped into the Gleniffer reservoir</a>, which some Albertans rely on for drinking water. Plains Midstream Canada <a href="" target="_hplink">trucked in drinking water</a> for those residing near the area.

  • May 19, 2012 -- Northwest Alberta

    Pace Oil and Gas's waste disposal line <a href=" Lake spill pegged at 22,000 barrels/6683338/story.html" target="_hplink">leaked about 22,000 barrels of a mixture of oil and water</a> 20 kilometres southeast of Rainbow Lake. The spill was discovered on May 19 by another oil and gas company.

  • May 19, 2012 -- Northwest Alberta

    The oil spill "<a href="" target="_hplink">ranks among the largest in North America in recent years</a>," the Globe and Mail wrote.

  • June 26, 2011 -- Swan Hills

    A pipeline explosion and oil leak at a Pengrowth Energy facility caused a pipeline to leak <a href="" target="_hplink">500 barrels of light, sweet crude oil into Judy Creek</a> near Swan Hills, Alberta.

  • June 26, 2011 -- Swan Hills

    Energy Resources Conservation Board spokesman Darin Barter said the <a href="" target="_hplink">leak was relatively small</a>. <br></br> "It's what we would consider a minor spill with 95 per cent of the product coming out of the pipeline being water and five per cent oil," he told CBC. "However, we're taking it very seriously, as is the company."

  • April 29, 2011 -- Little Buffalo First Nation

    Plains Midstream Canada's 45-year-old Rainbow pipeline<a href="" target="_hplink"> spilled roughly 28,000 barrels of light crude oil</a> near Little Buffalo First Nation.

  • April 29, 2011 -- Little Buffalo First Nation

    Residents, including children, <a href="" target="_hplink">reported incidents of burning eyes, stomach pains, disorientation, nausea and headaches</a>, according to the Assembly of First Nations.