Fri, Jul 08, 2005 page3

• Analysts question impact of CNOOC bid on Taiwan

  • By Shih Hsiu-chuan / STAFF REPORTER
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  While renewed anti-Chinese sentiment in the US has been triggered by a Chinese bid to take over Unocal, the US' ninth-largest oil company, political analysts said there is a possibility of a positive impact on Taiwan in terms of the struggle over energy sources by the great powers.

  The bid by China's state-run China National Offshore Oil Corp (CNOOC) has sparked widespread controversy in the US although CNOOC's all-cash bid is about US$2 billion higher than the cash-and-stock offer by Chevron Corp, the second-largest US oil company.

  Last week the US House of Representatives voted overwhelmingly for a non-binding resolution that calls on the US government to block CNOOC's offer on the grounds that it could threaten US national and energy security.

  CNOOC has filed a notice with the Committee on Foreign Investment in the US, a multi-agency panel that reviews acquisitions of US businesses by foreign companies, to look into its proposed acquisition.

  Although the Chinese bid has put pressure on Chevron to sweeten its offer before Unocal's shareholders vote on the bids early next month, it is widely believed that the US government's political concerns will be the crucial factor in the battle between CNOOC and Chevron.

  "It's nothing new that China, which has been a net oil importer since 1995, has dedicated itself to achieving its goal of strategic oil reserves in recent years," a high-level official of international affairs told the Taipei Times on condition of anonymity.

  "The widespread discussions about CNOOC's bid for Unocal demonstrate that the US has switched its strategic concern over regional security from the Middle East since the Sept. 11 terrorist incident to the Asia-Pacific area," the official said.

  Even though some in the US supports the CNOOC bid, citing the Japanese economic invasion of the US in the 1980s, the fact that Chinese companies are targeting strategic resources raises concerns about China plundering the international energy market, the official said.

  China's growing power, based on its expansion of energy sources, could only bring about more tension between China and the US, he said

  "How to manipulate the confrontation between two great powers in favor of Taiwan is of concern," the source said.

  "Unlike the US and China, which regard their oil needs as strategic resources, Taiwan's oil need for Taiwan is just for defensive purposes. Since Taiwan won't get involved in the contest for international energy sources, the more concern the US shows over China's efforts, the more Taiwan's security will be ensured," said Chang Kuo-cheng (張國城), a doctoral candidate in political science at the University of Wisconsin and former deputy director of the Democratic Progressive Party's (DPP) department of Chinese affairs.

  "The rationale of this inference is the same as the strategy the US has exerted in the Middle East -- nurturing Israel for the sake of having its influence on the oil resources in the Arab countries," Chang said.

  Likewise, strategic cooperation between Taiwan and the US will is likely to be enhanced by China's plunder of the energy market, he said.

  A Xinhua news agency report said that between 1990 and 1999, China's GDP increased at an annual rate of 10.4 percent percent, making China one of the fastest growing economies in the world. During the same period, China's petroleum consumption increased at an annual rate of 6.3 percent while its oil production grew at an annual rate of 1.7 percent.

  The message we can read from China's soaring demand for petroleum and other sources of energy is not only its rapid economic growth but also the vulnerability of its economy because of its serious shortage of energy resources, Chang said.

  "In view of this, we shouldn't worry about China's expansion into the international energy market as it will enhance Taiwan's strategic position in terms of Taiwan-US-China trilateral relations," he said.

  Since Unocal's major reserves are in Asia, some have voiced concern that a successful CNOOC bid would help China dominate the oil market, giving it influence over international oil prices and the ability to block Taiwan's exploration of overseas energy resources.

  Alexander Huang (黃介正), director of the Graduate Institute of American Studies at Tamkang University, however, disagreed.

  "Taiwan has been a price taker but not a price maker in the international oil market," Huang said.

  "In addition, since Taiwan and China have different energy supply sources, it would be difficult for China to launch an isolation campaign against Taiwan," he said.
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