Failed CNOOC-Unocal deal leaves China scrambling for energy supplies
Beijing (AsiaNews/Agencies) Chinese media have condemned US policy over the bid by China National Offshore Oil Company Ltd (CNOOC) to buy Unocal, saying it calls into question the free trade dogma Washington trumpets to the world and demonstrates that politics rules business.
Never the less, the failed acquisition of the California-based Unocal because of strong domestic political opposition has made CNOOC a household name. No one knew CNOOC before the bid; now the whole world does, said economist Han Xiaoping.
In its August 2 press statement announcing the decision to drop its offer, CNOOC said it was "reluctantly abandoning" the US .5 billion offer, calling political opposition in the US "regrettable and unjustified".
The oil giant pointed out that it was willing to improve its bidwhich was already US billion above Chevron's current competing bid by another billion but had to give up owing to the increasingly hostile "political environment" in the US.
Experts are now left wondering as to how Chinese companies will secure access to the oil supplies the country needscurrently, China is the second largest oil consumer after then US and China's Trade Ministry expects crude oil imports to top 130 million tonnes this year.
Buying up foreign oil companies is one quick way of laying hands on oil fields and expertise. For this reason, the US opposed Unocal's sale to a Chinese company. Not only does the California-based company hold rights to important fields and reserves, but also owns advanced deep-sea oil exploration and drilling technologies whose transfer to China worries the US military.
Political considerations are likely to continue playing a role in future oil-related transactions. CNOOC's failure to acquire Unocal is likely to push Chinese companies to consider overseas mergers and acquisitions in Indonesia and Australia, said Shang Ma, a Fitch Ratings oil analyst. These are seen as less threatening to foreign governments and the world's major oil companies.
Woodside Petroleum, a major Australian oil company with important gas reserves in north-western Australia, might interest CNOOC. But in 2001, the Australian government opposed attempts to take it over by foreign companies.
At the same time, the major oil companies are prepared to go to great lengths to stop acquisition bids in an unstable market and rising prices. For instance, two years ago Shell and Exxon Mobil had stopped CNOOC from buying oil and gas in Kazakhstan.
Given US "protectionism", China has developed trade ties with Iran and Venezuela which the US has tried to limit.
Analysts believe that it would be easier for China to carry out oil and gas exploration and drilling working with state-owned companies in Asia, the Mideast and the Caspian Sea. (PB)
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