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Congressmen call for Unocal probe



By Upstream staff 

Two members of Congress have asked the Bush administration to review - and possibly halt - an effort by China's CNOOC to acquire Unocal.

The report was released in Sunday's Wall Street Journal.

CNOOC has said it would challenge Chevron's $16.4 billion bid for California-based Unocal.

Republican California Congressmen Richard Pombo and Duncan Hunter sent a letter to President Bush on Friday seeking a federal review of any CNOOC bid, according to the Journal.

The congressmen urged the President to exert his authority under a 1988 federal law, by way of a review by the Committee on Foreign Investments in the US, an interagency panel chaired by Treasury Secretary John Snow.

Following the review, the President could potentially block the deal, though the report said that such a move would be unusual.

In April, Chevron reported that it would buy Unocal in a $16 billion cash and stock deal.

CNOOC in early June also expressed interest in purchasing the oil company in part because of its existing oil and natural gas assets throughout Asia.

A CNOOC spokesman in Beijing had no comment on the report. However, he reiterated CNOOC's statement on 7 June that the company was still considering buying Unocal. If a deal is clinched, it would be the biggest ever overseas purchase by a Chinese outfit.

Analysts have speculated that a counter-bid by CNOOC would come up agains US regulatory hurdles given that it is a state-owned Chinese company. It would also be difficult for CNOOC to sell unwanted Unocal assets in North America, according to Reuters.

Analysts said that If CNOOC were to offer an all-cash bid, it would have to boost its borrowings by $14.7 billion, which could severely limit the company from making further acquisitions or even paying dividends.


Monday, 20 June, 2005, 16:18 GMT  | last updated: Monday, 20 June, 2005, 16:31 GMT

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