Washington Post: Leave CNOOC bid alone
(Agencies)
Updated: 2005-07-06 11:55

A takeover bid for a US oil firm by a Chinese company makes economic sense and should not be blocked by the US administration, the Washington Post said.

In an editorial, the influential newspaper said there was "understandable concern" among members of Congress at the bid for Unocal by the China National Offshore Oil Corporation (CNOOC).

China National Offshore Oil Corporation's (CNOOC) oil rigs is seen in China's Liaodong Bay of the Bohai sea February 3, 2005. [newsphoto]

"But however widespread and understandable, these concerns are mistaken. The reason is that China is an oil importer," it said.

"US reliance on oil exporters with unsavory and potentially unstable governments is a genuine security problem," it said, citing Saudi Arabia for one.

"Oil importers such as China are different, however."

"They have no interest in suppressing oil production to drive up prices; to the contrary, if China gains control of Unocal it will want to boost production as much as possible, which would push world prices downward and so help the United States."

The newspaper noted that CNOOC's bid faces regulatory hurdles in Washington.

It is being financed in part by interest-free loans from Chinese government entities, which some US lawmakers have claimed -- "almost certainly wrongly", according to the Post -- violates World Trade Organization rules.

"Equally, some assert that Unocal's drilling technology may have military applications, so the bid may have to be reviewed on national security grounds," the editorial said.

"But however these debates play out, it's important that the temperature not be raised by spurious anxieties about oil security," it said.

"Far from wanting to buy Unocal in order to gain leverage over this country, the Chinese are simply trying to protect their own economy against a future jump in oil prices. There's nothing wrong with that."

The newspaper's intervention came a day after the Chinese government angrily responded to a vote by US lawmakers last week that urged the US administration to block CNOOC's 18.5-billion-dollar takeover bid for Unocal.

"We demand that the US Congress correct its mistaken ways of politicizing economic and trade issues and stop interfering in the normal commercial exchanges between enterprises of the two countries," China's foreign ministry said in a statement.

On Thursday, the House of Representatives voted 398-15 for the non-binding resolution, which said the takeover "would threaten to impair the national security of the United States".

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