CNOOC blasts House resolution, says will hike USG production

Washington (Platts)--30Jun2005

Reacting swiftly to a language in a proposed US House of Representatives
resolution condemning its proposed acquisition of California-based Unocal,
CNOOC Ltd, the Hong Kong subsidiary of state-controlled China National
Offshore Oil Co, said Thursday that its purchase of Unocal had the potential
to increase oil and natural gas supplies in the US market through better
exploitation of Unocal's more than 500 Bcf of reserves in the Gulf Of Mexico.

"The combined company will be able to increase investment in deepwater Gulf of
Mexico, adding oil and gas supplies to the US market," CNOOC's Washington
office said. "This is a consensual transaction," CNOOC said. "CNOOC was
invited by Unocal's board in early 2005 to participate with others in the sale
process." CNOOC denied it was receiving any financial backing from the Beijing
government, noting that $7-bil worth of financing in the $18.5-bil all-cash
offer is coming from the coffers of the debt-free parent company.

CNOOC refuted the notion it would hoard Asian and Gulf of Mexico energy
products, noting that most of Unocal's Asian production is locked up in
long-term contracts, while it has pledged to sell USG gas and oil back into
the US market. "The transaction will not adversely affect the US oil and gas
markets," CNOOC said. CNOOC also rejected the House resolution's language that
its purchase of Unocal opened the door to national security-sensitive
technology transfers, saying Unocal's seismic and drilling techniques are from
third-party providers and available on the open market. "CNOOC does not
believe this proposed transaction represents a national security threat to the
United States," the company said. "CNOOC has also pro-actively made assurances
to Unocal addressing concerns relating to energy security."

"CNOOC has planned for and wants to participate in a [Committee on Foreign
Investment in the US] review of the transaction as soon as possible," CNOOC's
response to the proposed House resolution said. Sources close to CNOOC said
the company hopes the resolution passes despite the negative language because
it will speed up the US Treasury Dept's CFIUS review of the deal, a deal which
runs the risk of getting stale with time. Unocal on Wednesday scheduled a
shareholder vote for Aug 10 on Chevron's rival $16.4-bil cash and stock
proposal and reiterated that while its directors were studying CNOOC's richer
$18.5-bil all-cash bid, they wanted more time to study CNOOC's offer before
taking a stance.

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