Unocal Bid Opens Up New Issues of Security

NYT ^ | 7/13/05 | Steve Lohr

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The fate of the China National Offshore Oil Corporation's bid for Unocal remains uncertain, but one thing is clear. The takeover offer has prompted a gathering groundswell in Congress to make sure oil is defined as a product vital to America's national security.

If the political push gains momentum, it will change the mandate and reach of a little-known, secretive body with representatives from 12 government agencies, the Committee on Foreign Investment in the United States. The outcome of Cnooc's bid for Unocal may rest in the hands of that committee.

One salvo came at the end of last month with a House resolution that declared that permitting the Chinese company to buy Unocal would "threaten to impair the national security of the United States." It passed 398 to 15.

Now the members of a bipartisan advisory group to Congress are urging representatives and senators to amend the law that controls the work of the foreign investment committee. The Congressional advisory group wants the law to specifically expand the definition of America's national security to include matters of economic security, like energy and oil supplies.

"Is energy security national security? We certainly think it is," said C. Richard D'Amato, chairman of the United States-China Economic and Security Review Commission, which advises Congress.

Mr. D'Amato is scheduled to testify today at a House Armed Services Committee hearing on the national security implications of the Chinese company's pending bid for Unocal, a midsize American oil company.

The $18.5 billion bid by Cnooc competes with one from Chevron, which is lower at $16.8 billion. But the Chevron offer came before the Cnooc bid surfaced, and Cnooc faces regulatory and political hurdles that Chevron does not. The Unocal board has approved the Chevron offer, but is now talking with Cnooc as well...

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