Sat, Jul 28, 2012 - Page 15 News List

China-Canada oil deal raises hackles in the US

‘OPPORTUNITY’:Nexen has 10% of its assets in the US, and a leading senator said the US should try to block the deal unless China improves market access

Reuters, WASHINGTON

The US government should block a bid by China’s state oil company CNOOC (中國海洋石油) for Canadian oil company Nexen until China’s government provides fair access for US companies that want to invest in China, a top Democratic senator was planning to tell Treasury Secretary Timothy Geithner yesterday.

In a draft letter obtained by Reuters, Charles Schumer, the Senate’s No. 3 Democrat and a frequent critic of China’s trade and currency policy, said the powerful Committee on Foreign Investment in the US (CFIUS) should not approve the deal until China makes “tangible, enforceable commitments” on market access for US companies.

The US inter-agency committee reviews foreign takeovers of US assets for national security concerns. About 10 percent of Nexen’s assets are in the US, where it has oil drilling operations in the Gulf of Mexico.

CNOOC asked for a voluntary review by CFIUS on Monday, the same day it revealed its bid for the Canadian company, but the start date for the review is undetermined, a source close to the Chinese firm said.

The source declined to speculate on the outcome of the review. Schumer’s draft letter is the strongest statement yet by a US political leader against the US$15.1 billion deal, which is the biggest foreign acquisition for a Chinese company and which would give China a significant foothold in North America’s oil assets.

Schumer said he believes the proposed deal would benefit the US and its energy sector, but said Geithner should “not miss this opportunity” to ensure China lives up to promises it has made to provide fair access for US companies into Chinese markets.

The Democratic leader in the US House of Representatives, Nancy Pelosi, also called for the committee to “thoroughly review” the CNOOC takeover, while Republicans in Congress have also expressed concern about the deal, although they stopped short of saying that the US government should intervene.

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