Chevron blocking CNOOC bid in Washington

In Washington, DC, on Thursday, the US House of Representatives voted 328 - 91 to block China National Offshore Oil Corporation’s bid for Unocal by denying the Bush administration money to look into the deal.

Under the amendment tacked on to another bill, the Treasury Department could not use federal funds to recommend approval of the CNOOC’s bid.

It is questionable whether the measure will pass; however, it is an indication of the amount of opposition there is to the deal in Washington.

Also on Thursday, a Chevron official said that the CNOOC bid should be referred to the World Trade Organization on the grounds that the bid is being subsidized by the Chinese government.

Chevron is trying to make the case that because the money CNOOC is using to purchase what Chevron called a “critical resource” is being funded by low- or no-interest loans, that it is really a government trying to enter into a commercial venture.

CNOOC insists that its bid is entirely commercial in nature. The Chevron official, meanwhile, also claimed once again that his company’s bid for Unocal is superior even though it is lower because it could be closed sooner and carried no security risks or long regulatory delays.

At any rate, it isn’t likely that the issue will go before the WTO since that organization does not have any rules pertaining to cross-border mergers. It will, however, probably ratchet up the political rhetoric surrounding the issue to even higher levels.