Foreign Correspondence

[Amaunet]

Comments on China’s (CNOCC) proposed acquisition of Unocal and why CNOCC seems willing to pay so high a price for Unocal.

As with other Chinese acquisitions overseas, the possible US$13bn deal raises questions about the prices mainland companies are willing to pay and their ability to manage the transaction and, later, the assets themselves.

The US group has an enterprise value per barrel of the equivalent (EV/BOE) of US$7.71.

CNOOC paid $1.98 in EV/ BOE for its stake in Australia's Northwest Shelf gas project, and$0.98 in EV/BOE for raising its stake in Indonesia's Tangguh LNG project last month.

CNOOC is believed to be planning to sell the non-Asian assets back-to-back.

What is interesting is the Asian assets include a piece of the Baku-Tbilisi-Çeyhan (BTC) pipeline.

The Baku-Tbilisi-Çeyhan (BTC) pipeline development project is the key to understanding the US imperialist conniving that is behind Georgia’s Rose Revolution. Upon completion, the BTC pipeline network will be the world’s longest, costing well more than the initially proposed $3.6 billion and capable of extracting and exporting 50 million tons of Caspian oil and natural gas to Western markets beginning in late December 2004. The BTC Pipeline Company is responsible for planning and constructing this project; the major shareholders in this huge consortium include British Petroleum, France’s TotalFinaElf, Delta-Hess (a joint venture of Saudi Arabia’s Delta Oil and Amerada), ConocoPhillips and Unocal.
http://www.infoshop.org/inews/article.php?story=04/02/23/0325444&query=unocal

What is more interesting is that Unocal has been cozying up to Karzai of Afghanistan

How many stories mentioning Hamid Karzai with Unocal in the last two years? One in Times, none in Post. How many reports that mention Karzai in this same time period? Over 350 in the Times, over 250 in the Post. Why is Karzai’s relationship with an American gas company relevant?
http://www.infoshop.org/inews/article.php?story=04/12/16/0862142&query=unocal

According to insiders, there are strong indications that Unocal could be favored by Afghan officials to return to the venture, though the company's role is not exactly clear in the ADB-led project.

Half of the 1,800-kilometer pipeline will pass through Afghan territory to supply gas from the Dawlatabad city of Turkmenistan to Gawadar Port of Pakistan. The trans-Afghan pipeline has been one of the most controversial issues among Western politicians, investors and major world gas companies, including Unocal and Bridas, since 1995.
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The U.S. and China have been battling for dominance at Gwadar Port where the pipeline is to terminate.
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There is a reason China is looking at Unocal. Indeed the regulators and politicians may not let the deal go through.

-Am