WASHINGTON, June 24: The US government said on Friday that a bold takeover bid by a state-run Chinese energy firm for US oil major Unocal is likely to be reviewed on national security grounds.
Officials acknowledged fierce disquiet here over a company controlled by the authorities in Beijing, China National Offshore Oil Corp (CNOOC), getting its hands on a major player in the sensitive US energy sector.
Commerce Secretary Carlos Gutierrez said the 18.5 billion-dollar bid, which CNOOC unveiled on Thursday, would be subject to the normal vetting process used for a foreign takeover of a US company.
“Well, it’s a process that reviews all foreign investments and whether it be national security or other considerations, but there is a process in place that would be applied to this transaction,” he told the CNBC television network.
Mr Gutierrez added that ‘national security is not the only consideration’.
“There are many considerations. All those considerations will be reviewed And they’ll be reviewed in due process. I don’t think it would be fair to any process to speculate before we have the facts,” he said.
The CNOOC’s unsolicited bid, easily China’s biggest foreign corporate raid yet, trumped a rival offer for Unocal by US company Chevron Corp.
The Unocal board said it had received permission from Chevron to open talks with CNOOC, to comply with its duty to shareholders to investigate all options.
But it said that its recommendation to shareholders to accept the Chevron deal ‘remains in effect’.
Chevron said on Thursday it was ‘satisfied’ with its bid and expressed confidence it would prevail even though the Chinese offer is worth some 1.5 billion dollars more.
Asked if Chevron would consider raising its offer, vice chairman Peter Robertson told CNBC: “We are going to see our process through. We look forward to getting this closed.”
The CNOOC’s offer for the California-based Unocal, whose activities are focused on exploration in North America and Asia, highlights the insatiable demand for energy in China’s fast-growing economy.
But it also throws into sharp focus the debate in Washington over how to respond to China’s economic rise.
Several members of Congress from both sides of the political divide, demanding a thorough review of the CNOOC bid by the US Treasury under the Defence Production Act, argued that the administration must now get tough.
“If we don’t review this one, that law is meaningless,” Democratic Senator Ron Wyden told Treasury Secretary John Snow at a special finance committee hearing on China held on Thursday.
“I don’t think being a free trader is synonymous with being a sucker and a patsy,” he said, according to The Washington Post.
But Mr Snow and Federal Reserve chief Alan Greenspan told the Senate committee that a push by some lawmakers to slap an across-the-board tariff on Chinese goods of 27.5 per cent would devastate the US economy.
Mr Gutierrez reiterated that warning, but said the United States would be unafraid to show its displeasure on a range of trade topics when he and other top officials attend annual talks in Beijing on July 11.
“They have access to our market; we want to have access to their market,” he said, evoking the CNOOC offer for Unocal.
“We’re just looking for a level playing field so that our business people, our workers, can do what they do best and compete,” he said. —AFP
