Saturday July 28, 2012
CNOOC bid faces US hurdle
WASHINGTON: The US government should block a bid by China's state oil company CNOOC for Canadian oil company Nexen until China's government provides fair access for US companies that want to invest in China, a top Democratic senator plans to tell Treasury Secretary Timothy Geithner.
In a draft letter obtained by Reuters, Charles Schumer, the Senate's No. 3 Democrat and a frequent critic of China's trade and currency policy, said that the powerful Committee on Foreign Investment in the United States (CFIUS) should not approve the deal until China made “tangible, enforceable commitments” on market access for US companies.
The US inter-agency committee reviews foreign takeovers of US assets for national security concerns. About 10% of Nexen's assets are in the United States, where it has oil drilling operations in the Gulf of Mexico.
CNOOC asked for a voluntary review by CFIUS on Monday, the same day it revealed its bid for the Canadian company, but the start date for the review was undetermined, a source close to the Chinese firm told Reuters.
The source declined to speculate on the outcome of the review.
Schumer's draft letter is the strongest statement yet by a US political leader against the US$15.1bil deal, which is the biggest foreign acquisition for a Chinese company, and which would give China a significant foothold in North America's oil assets.
Schumer said he believed the proposed deal would benefit the United States and its energy sector, but said Geithner should “not miss this opportunity” to ensure that China lived up to promises it had made to provide fair access for US companies into Chinese markets.
“I respectfully urge you, in your capacity as chairman of the Committee on Foreign Investment in the United States, to withhold approval of this transaction to ensure US companies reciprocal treatment,” Schumer said in the draft letter.
The Democratic leader in the US House of Representatives, Nancy Pelosi, also called for the committee to “thoroughly review” the CNOOC takeover.
“This deal prompts great concern about the Chinese government's continued attempts to use its state-owned enterprises to acquire global energy resources,” Pelosi spokesman Drew Hamill said in a statement. - Reuters