US Government Should Block China-Canada Oil Deal, Says Senator
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China National Offshore Oil Corporation’s (CNOOC) $15.1 billion takeover of Canadian oil company Nexen may be under threat, reported Reuters on Thursday, after a top U.S. senator urged his government to block the deal until the Chinese government made “tangible, enforceable commitments” for U.S. companies investing in China.
China National Offshore Oil Corporation’s (CNOOC) $15.1 billion takeover of Canadian oil company Nexen may be under threat, reported Reuters on Thursday, after a top U.S. senator urged his government to block the deal until the Chinese government made “tangible, enforceable commitments” for U.S. companies investing in China.
According to a draft letter obtained by Reuters and the Wall Street Journal, US Senator Charles Schumer, the Senate’s No. 3 Democrat and a frequent critic of China’s trade and currency policy, had reportedly advised Treasury Secretary Timothy Geithner to use the CNOOC-Nexen deal as leverage – to hold China accountable for promises they had made to improve market access for U.S. companies.
Additionally, Schumer had written that while he believed the proposed deal would benefit the U.S. and its energy sector, Geithner should “not miss this opportunity” to “play a little hardball” so that China would provide fair access for US companies into Chinese markets.
“I respectfully urge you, in your capacity as chairman of the Committee on Foreign Investment in the United States (CFIUS), to withhold approval of this transaction to ensure U.S. companies reciprocal treatment,” Schumer wrote.
[quote]”It’s about time we played a little hardball,” he later said.[/quote]Related: US Allows China to Purchase Govt Debt Directly From Treasury
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The CNOOC-Nexen requires approval from the Committee on Foreign Investment in the U.S. as Nexen owns a U.S. subsidiary with offshore oil drilling assets in the Gulf of Mexico.
According to Reuters, the Democratic leader in the U.S. House of Representatives, Nancy Pelosi, had already called for the committee to “thoroughly review” the CNOOC takeover even prior to Schumer’s letter.
But it remains unclear whether the companies will file for a review or if the U.S. government can review the transaction on its own because of its security implications.
On Thursday, Republicans in Congress also expressed concern about the deal, although they stopped short of saying that the U.S. government should intervene.
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“I’m concerned because it’s really a trend, particularly in the Gulf of Mexico…I don’t know enough about it to know whether it should be blocked through any American, U.S.-based law. But I do think the far better alternative is for us to play offense, and for us to be developing, taking advantage of these energy resources,” said Louisiana Senator David Vitter.
[quote]”Do we really want to be buying our oil or Canadian oil back from the Chinese? If we don’t take action to develop our resources and work with our closest friend and ally Canada, that’s exactly what’s going to happen,” added North Dakota Senator John Hoeven at a news conference.[/quote]
