House Says No to China Oil Deal By Maura Reynolds Times Staff Writer
July 1, 2005
WASHINGTON — Voicing concern about national security and the U.S. economy, the House of Representatives passed two measures Thursday aimed at blocking the proposed takeover of El Segundo-based Unocal Corp. by a Chinese oil company.
In a strong bipartisan vote of 333 to 92, the House approved an amendment to a Treasury Department spending bill forbidding the administration from using federal funds to approve the bid by CNOOC Ltd., an arm of government-owned China National Offshore Oil Corp., to buy Unocal for $18.5 billion.
The Treasury Department reviews proposals for significant foreign investment in U.S. companies to ensure that national security isn't damaged, a process that would involve use of federal funds. The review is conducted through the multi-agency Committee on Foreign Investment in the United States, which has seldom blocked foreign investments or mergers.
But more important than its specific terms, the amendment, sponsored by Rep. Carolyn C. Kilpatrick (D-Mich.), was a vehicle for expressing congressional displeasure at the proposal.
"Why do we want to sell our oil to a global economic competitor?" Kilpatrick said. "Americans deserve a thorough government evaluation of the implications of Unocal's takeover by one of our chief economic competitors."
Although the amendment was passed, it could be changed or removed when members of the House and the Senate meet to reconcile their versions of the legislation.
In a separate action, the House approved a resolution, in a late-night 398-15 vote, expressing the chamber's concern that the proposed buyout "could threaten to impair the national security of the United States" and asking the president to initiate a review if the companies proceed.
"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 W. Pombo (R-Tracy), who sponsored the resolution.
Opponents of the resolution argued that permitting the Chinese to buy Unocal was only fair, considering that China is one of the largest holders of U.S. debt. They also noted that Unocal supplies only about 1% of the country's petroleum.
"This resolution basically missed the point," said Rep. Earl Blumenauer (D-Ore.). "The problem we have now is … we are as addicted to the Chinese loans, to their credit to us, as we are to Saudi oil."
Unocal's board is weighing competing offers from CNOOC and Chevron Corp. of San Ramon, Calif., which is in Pombo's congressional district. CNOOC's $18.5-billion, all-cash offer for Unocal is equal to $67 a share.
The value of Chevron's cash-and-stock offer changes daily with the price of Chevron's stock. Chevron's shares closed Thursday at $55.92, down 84 cents, making its Unocal bid worth about $59.45 a share, or $16.2 billion. Unocal shares closed at $65.05, down 15 cents, and CNOOC's U.S.-traded shares closed at $59.32, up 7 cents.
"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 the Chinese company. "Despite the heated rhetoric, we firmly believe the [Treasury review] process will be fair, thorough and not influenced by either emotion or politics."
The Chinese company has pledged to sell Unocal's U.S.-produced oil and natural gas within the United States. Unocal owns substantial reserves in Asia, and the Chinese government is eager to find long-term sources of fuel for its growing economy.
Chevron spokesman Don Campbell said the company appreciated "the open and vigorous debate" in Congress, and he repeated the company's contention that the CNOOC offer was being unfairly subsidized through cheap financing from Chinese-government-related entities.
Also Thursday, Unocal said high energy prices boosted its second-quarter profit more than 20% above analyst expectations. Unocal said it would report after-tax second-quarter income, excluding some items, of $1.65 to $1.70 a share Aug. 1, exceeding the average estimate of $1.36 a share from analysts surveyed by Thomson First Call.
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-------------------------------------------------------------------------------- Times staff writer Elizabeth Douglass contributed to this report.
Chevron donates to lawmakers against China bid Politicians deny link to stance on oil firm's Unocal offer - David R. Baker, Chronicle Staff Writer Saturday, July 23, 2005
Chevron Corp. has given campaign contributions to politicians trying to block the company's Chinese rival in the bidding war for Unocal Corp., with some of the money flowing in the last month.
Chevron, a prolific donor in Washington, has funded some of the lawmakers who have been most critical of China National Offshore Oil Corp., which initiated an $18.5 billion takeover bid for Unocal on June 22.
-- Sen. Dianne Feinstein, D-Calif., has received about $30,800 from Chevron since 1989, according to the Center for Responsive Politics. Feinstein on Friday called for the secretaries of defense, energy and homeland security to review any deal between CNOOC and Unocal.
-- Rep. Richard Pombo, R-Tracy, has received about $21,500 from the company over the years and accepted a $2,000 contribution on June 29, according to a filing with the Federal Election Commission. Pombo, who chairs the House Resources Committee, has called China National's bid a threat to U.S. security.
The lawmakers say there is no link between Chevron's contributions and their stance on CNOOC. They say they are troubled by the possibility that a firm 70 percent owned by a communist government could buy Unocal, adding that Chevron hasn't asked for any special treatment in the matter.
"Neither the chairman nor his staff has asked for or received any help or guidance from Chevron," said Pombo spokesman Brian Kennedy.
The San Ramon company says its campaign funding has nothing to do with its pursuit of Unocal. Although some politicians critical of China National received contributions after the bidding war began, Chevron had planned its 2005 political donations two months earlier, in April, spokesman Don Campbell said.
"The company does not tie political contributions to specific actions," he said. "It sets up a plan early in the year for contributions. We do not make them on an ad-hoc basis."
Campaign finance experts also caution not to assume a link. Large corporations typically give to many candidates on both sides of the aisle.
"A company like Chevron hopes that years of giving pay off in a situation like this," said Steven Weiss, spokesman for the Center for Responsive Politics. But "campaign contributions are far from a guarantee that politicians will agree with you."
Chevron gave just under $499,000 to individual candidates in the 2004 election cycle and $1.3 million in 2002, according to data compiled by the center. Most of the money has gone to Republicans -- President Bush has received $44,900, more than any other candidate.
But Democrats, too, have benefited. Only eight other politicians, for example, have received more than Feinstein.
As a foreign firm, China National is barred from making campaign contributions.
Four lawmakers who have criticized China National's bid received money from Chevron after the Chinese firm announced its offer for Unocal, according to a company filing with the Federal Election Commission.
All four received donations on June 29. Pombo got $2,000. The rest -- Rep. Kevin Brady, R-Texas, Sen. Kent Conrad, D-N.D., and Sen. James Inhofe, R- Okla. -- each received $1,000. All had received contributions from Chevron in the past.
Earlier this month, Conrad questioned whether CNOOC's bid violated China's commitments to the World Trade Organization. A spokesman Friday said Conrad has long warned about the undue influence of foreign central banks on the American economy.
"When he talks about the trade deficit, he holds up a chart of the countries we owe the most money to," said spokesman Chris Thorne, noting that China occupies a large portion of the chart. "His position on Unocal is consistent with things he's been saying for years."
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