House Opposes CNOOC Bid For Unocal

Two measures passed the House on Thursday, aimed at keeping Unocal out of the Chinese energy company’s hands.

With ongoing concerns about economic and national security issues, the House turned aside requests from business interests to leave the CNOOC proposal for Unocal alone.

The House amended a Treasury spending bill by tacking on an amendment barring the Bush administration from using federal funds to approve the CNOOC bid. Since the Treasury Department’s Committee on Foreign Investment normally reviews such bids, the House seems to be trying to prevent it from doing its job.

And without a review from the Committee, the CNOOC bid can’t be approved. This leaves Unocal open to accept the Chevron bid of $16.4 billion USD. That deal, a cash and stock bid, undervalues Unocal in the opinion of many investors, who are certain to be angered by Congressional interference.

The amendment passed with bi-partisan support, 333 to 92. “Why do we want to sell our oil to a global economic competitor?” said Rep. Carolyn Kilpatrick (D-Mich.), the sponsor of the amendment.

“Americans deserve a thorough government evaluation of the implications of Unocal’s takeover by one of our chief economic competitors.” It isn’t clear how Ms. Kilpatrick’s amendment helps this happen, as it would prevent such a government review from taking place.

A second amendment passed late in the evening by the House called for the President to initiate a review of the deal should the companies proceed with their negotiations. That passed with a vote of 398-15.

“I believe it is imperative that the United States protect its access to Unocal’s energy resources in order to protect our economy and our national security,” said Rep. Richard Pombo (R-Cal), who sponsored the resolution.

Opponents of the legislation point out that Unocal only provides 1 percent of US oil needs, and noted the greater problem isn’t Chinese ownership of Unocal, but American economic dependence on China’s huge purchases of Treasury securities that finance the national debt.

For its part, CNOOC has asked the White House to review the transaction already. “Today’s resolution calls for what CNOOC has been suggesting all along, namely, a thorough review of the transaction,” said Mark Palmer, a U.S. representative for CNOOC.

“Despite the heated rhetoric, we firmly believe the process will be fair, thorough and not influenced by either emotion or politics.”

David Utter is a staff writer for Murdok covering technology and business. Email him here.