Chinese oil giant ready for scrutiny

The Chinese oil company that seeks to take over California-based Unocal Corp. said June 27 it is eager to have the U.S. government scrutinize the national security implications of the deal and said the review process was critical to the success of the proposed merged company.

CNOOC Ltd. CEO Fu Chengyu said in a letter sent to Congress that he understands “the importance of these issues” and that he wanted an opportunity to discuss them with the Committee on Foreign Investment in the United States “as soon as possible.”

In mid-June, Beijing-based CNOOC made an unsolicited $18.5 billion offer for Unocal, which had already reached a tentative agreement to be purchased by Chevron Corp. for $16.6 billion. Even before the formal offer was made by CNOOC, which is backed by the Chinese government, members of Congress sent President Bush a letter warning him of the threats posed by China’s “pursuit of world energy resources.”

A separate letter began circulating in Congress the week of June 20, also calling on the Bush administration to investigate — through the aegis of the CFIUS — the national security implications of the proposed deal.

In his letter on June 27, Fu attempted to address some of the concerns the deal raises about America’s energy security by noting that Unocal’s oil and gas production amounts to less than 1 percent of all U.S. consumption.

He also reiterated his belief that CNOOC’s all-cash offer would benefit the shareholders of Unocal and that substantially all of the company’s U.S.-based workers would retain their jobs if the merger were completed.

Unocal shares rose 10 cents to close at $65.78 June 27 on the New York Stock Exchange. CNOOC Ltd.’s U.S.-traded shares rose 90 cents, or 1.6 percent, to close at $55.80 on the NYSE.

—The Associated Press