Trumping on a Pipe Dream

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House votes to block China-Unocal Deal
Fri Jul 1,12:30 AM ET

WASHINGTON (Reuters) - The U.S. House of Representatives on Thursday overwhelmingly voted to block the Bush administration from approving a Chinese company's attempt to acquire U.S. oil and gas producer Unocal Corp. (NYSE:UCL - news)

The House approved the measure 333-92 and attached it to a spending bill for the departments of Treasury, Transportation and other agencies for the fiscal year that starts on Oct. 1.

The House also voted 398-15 for a nonbinding resolution calling on the Bush administration to immediately conduct a review of the possible takeover. The resolution also states that a CNOOC takeover of Unocal could threaten U.S. national security.

China's CNOOC Ltd. (0883.HK) recently offered $18.5 billion in cash to acquire California-based Unocal. That bid topped a $16 billion-plus cash and stock offer that Unocal had already accepted from Chevron Corp. (NYSE:CVX - news).

Unocal has said it is discussing the offer with CNOOC and planned to update shareholders before an Aug. 10 vote on the Chevron deal.

"This is not the time to now sell our ninth largest oil refinery to a Chinese company," said Rep. Carolyn Kilpatrick (news, bio, voting record), a Michigan Democrat who pushed the amendment through the House.

Under Kilpatrick's proposal, which has not been debated by the Senate, the Treasury Department would be barred from spending any money to recommend approving a takeover of Unocal by CNOOC.

The Bush administration has said it would conduct an economic and security review if the deal is consummated. The Committee on Foreign Investment in the United States, an interagency committee chaired by the Treasury secretary, is charged with reviewing such acquisitions.

During a short House debate on the proposal, lawmakers expressed concerns about the skyrocketing U.S. trade deficit with China, China's financing of American debt and national security worries.

Rep. James Moran (news, bio, voting record), a Virginia Democrat, called on the House to defeat the anti-China amendment.

"It is far better to diversify their holdings. If they don't buy American oil companies or Western oil companies ... where are they going to go?" Moran asked.

"They're going to go to Iran and other countries not in our interest and we are going to start contributing to a bipolar world again," Moran said.

http://news.yahoo.com/s/nm/20050701/bs_nm/energy_unocal_congress_dc;_ylt=AtC5B4ZnKEUKBpDehDhGC92573Q...