House chairmen want review of China's bid to buy US energy firms

House chairmen want review of China's bid to buy US energy firms

Washington (Platts)--20Jun2005


The chairmen of the US House Resources and Armed Services committees Friday
wrote President George W Bush to request that he immediately initiate a
"thorough" National Economic Council-National Security review of China's
growing energy requirements and the implications for America's political,
strategic and economic interests. 

"We are growing concerned about China's ongoing and proposed acquisition of
energy assets around the world, including assets of US-based companies," wrote
Resource Committee Chairman Richard Pombo and Armed Sources Committee Chairman
Duncan Hunter. "We are specifically concerned that the government-owned
Chinese National Overseas Oil Company is reportedly seeking to purchase an
American oil company. Such an acquisition raises many concerns about US jobs,
energy, production and energy security." CNOOC has been evaluating whether to
attempt to counter-bid to purchase Unocal.

Chevron has made an $18-bil offer to buy Unocal, and the major recently
received conditional approval by the US Federal Trade Commission to consummate
the deal. The Chevron-Unocal merger is expected to be voted on by Unocal
shareholders in mid-July. In the meantime, CNOOC has said that it continues to
examine its options regarding Unocal, including possibly making a counter
offer for the US company, but had not made a decision. The company would not
confirm reports that CNOOC's non-executive directors are expected to be
receiving this week an evaluation by a group of independent advisers on the
proposal to counter-bid for Unocal. 

"Should CNOOC make an offer to acquire an American energy company, we strongly
encourage you to thoroughly review that transaction under authority vested in
you under amendments to the Defense Production Act, which would involve
convening the Committee on Foreign Investment in the United States chaired by
the Secretary of Treasury," Pombo and Duncan wrote.

The chairmen asked Bush to report the results of his NEC-NSC review back to
Congress within 90 days "so that we can immediately begin working together to
preserve and enhance the American way of life that depends upon continued
access to stable, predictable and affordable energy supplies." Pombo and
Duncan said they feared that American companies would find it "increasingly
difficult" to complete against China's state-owned or state-controlled energy
companies, "given their mandates to supply China's ever growing demand for
energy which will increasingly need to come from foreign sources." The
chairmen noted that a government-owned company like CNOOC "has access to the
Treasury of the Chinese government, something no company operating in the free
market has."

This story was originally published in Platts Global Alert
http://www.globalalert.platts.com

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