U.S. Officials Study Chinese Offer for American Oil Company Unocal

Mario Ritter 15 July 2005

I’m Barbara Klein with the VOA Special English Economics Report.

The Committee on Foreign Investment in the United States is small but important. Twelve government officials serve on the committee, known as CFIUS (SIH-fee-us). They investigate business deals that could affect national security. A current issue involves an offer by a Chinese oil company to buy an American one, Unocal.

In April, another American oil company, Chevron, offered Unocal shareholders a deal worth almost seventeen thousand million dollars. In June, however, CNOOC (SEE-nook) Limited of Hong Kong offered eighteen and one-half thousand million dollars. And an agreement to increase that offer has just been reported.

Unocal is based in California. But the Chinese company notes that about seventy percent of Unocal's currently proven oil and gas supplies are in Asia and the Caspian area. In its words: "CNOOC Limited believes that the combined company would have a leading position in the Asian energy market."

But CNOOC Limited is seventy percent owned by the China National Offshore Oil Corporation, which is owned by the Chinese government.

Congress is investigating the proposed merger with Unocal. The House of Representatives calls it a threat to national security.

On July first, CNOOC Limited requested approval from the Committee on Foreign Investment in the United States.

The secretary of the Treasury leads the committee. Included are officials from government agencies, along with presidential advisers on economic policy and national security.

President Gerald Ford established the committee in nineteen seventy-five. Its job was mainly just to study the effects of foreign investments. But, as a result of changes in law in nineteen eighty-eight, its duties expanded to include national security issues.

The committee reports to the president, who then must inform Congress of a decision. By law, the process must all take place within ninety days.

Since nineteen eighty-eight, only one foreign deal has been blocked completely. That year, a Chinese aircraft company had to sell its interest in an American maker of airplane parts.

Unocal shareholders are to vote on Chevron's offer on August tenth. But Chevron has given Unocal officials permission to talk with CNOOC Limited.

This VOA Special English Economics Report was written by Mario Ritter. Our reports can be found on the Web at voaspecialenglish.com. I'm Barbara Klein.