Unocal take over bid

[Zkribbler]

Chevron has submitted a $16.4 billion bid to take over Unocal. The Chinese corporation CNOOC has offered almost $19 billion.

Unocal is urging its shareholders to accept the Chevron bid. Washington is expressing concern about a Chinese take-over of such a major oil company.

My guess is that Congress will not let the Chinese win. With their rapidly expanding economy and skyrocketing demand for oil, if the Chinese buys out Unocal, all that oil will end up in the PRC, our gas prices will go ballistic and our economy will crash.

[Imran Siddiqui]

if the Chinese buys out Unocal, all that oil will end up in the PRC, our gas prices will go ballistic and our economy will crash.

WHAT? Or are you saying that is what crazy Congressmen are saying?

[Zkribbler]

No. Some congressmen are expressing opposition.

The fear mongering is mine.

[Imran Siddiqui]

Oh, then you are a loony .

Gas prices are set by international market. If the gas is sold in China, it won't affect anything because the displaced oil will be sold elsewhere, perhaps here. Besides, the Chinese companies want to make money. They'll sell it to whoever wants to pay.

Now if you are saying that increased Chinese demand will drive up oil prices... probably... but that is a seperate thing.

[Zkribbler]

Originally posted by Imran Siddiqui
Oh, then you are a loony .

Oh, there's no doubt of that.

The point I was ineptly attempting to make was that, once the Chinese own Unocal, the can control its oil even if US buyers want to pay more than Chinese buyers, i.e. they can refuse to sell to us at any price.

[Imran Siddiqui]

The point I was ineptly attempting to make was that, once the Chinese own Unocal, the can control its oil even if US buyers want to pay more than Chinese buyers, i.e. they can refuse to sell to us at any price.

And that's the loony part . If that happens, I'd say we're going to have far greater problems, because that's probably the beginning of a war... physical or trade.

The Chinese want to make money. They're not to going to refuse to sell.

And besides, the market price for oil is set by the international market. Someone else will sell more to the US for that price.

[Dinner]

The big problem is the Chinese company is owned by the government of China and isn't a private company. The goal seems to be for the Chinese government to secure Unocal's oil reserves as well as expand the state run oil company overseas.

[Zkribbler]

Imran, so I should just take a pill and relax?

[Imran Siddiqui]

Originally posted by Zkribbler
Imran, so I should just take a pill and relax?

Yes. I would.

Even if you have concerns about the Chinese government owning the big oil company, it won't hurt the US. Well... unless we get nuts and start raising tariffs all over the place and just inviting a trade war.

[Dinner]

I imagine Chevron will win after upping their offer for no other reason then a Chron-Unical merger could get approved by regulators while the merger with a foreign government owned company would likely take a long time to clear.

[Dinner]

Both of the deals on offer are a mix of cash and stock and on average private companies tend to be better run then nationalized companies. That fact alone would lead me to vote for Chevron over the Chinese government's company.

[Imran Siddiqui]

From the London Times:

Analysis

America still sees reds under CNOOC's bed over Unocal bid
By Carl Mortished, International Business Editor

IT’S our oil, they think in Washington. How dare the Chinese try to take it from us.

No one has expressed it in quite those terms but the hostile bid for Unocal by CNOOC, the Chinese state oil company, is sending senators rushing to erect protectionist barriers.

Ron Wyden, a Democrat, called on John Snow, the Treasury Secretary, to conduct a thorough review of the attempted takeover under the Defense Production Act. “I don’t think being a free trader is synonymous with being a patsy,” he said.

Richard d’Amato, chairman of the US-China Economic and Security Review Commission, said: “This is not a free market deal, This is the Chinese Government acquiring energy resources.”

A review of the $18.5 billion (£10.15 billion) bid on national security grounds now seems inevitable and a rattled CNOOC was yesterday making conciliatory noises, suggesting full cooperation with the review and a willingness to dispose of certain Unocal pipeline and storage assets.

That may not be enough to appease the US nationalists who in their protectionist frenzy are making the same mistake as the commissars in Beijing and the sheikhs of Araby. They are becoming oil hoarders.

In September last year, Lee Raymond, the chairman of ExxonMobil, told Opec member states to open up their economies to foreign investment. Invited to speak at a conference organised by the cartel, he said there was an urgent need for investment, because the world would need an extra 65 to 85 million barrels of oil per day by 2020.

The Exxon boss said: “The future need for petroleum energy will be such that restrictions in whatever form and wherever imposed [my italics], will jeopardise access to adequate energy supplies for world consumers.” Oil is fungible. It is the world’s most traded commodity and it moves to the highest bidder. Lee Raymond was objecting to the political exclusion of Western oil companies from Opec states which, since the 1960s, have imposed barriers of national sovereignty on their oil resources. It is a dangerous exclusion because the cushion of spare capacity that Opec once provided is almost vanished and the cartel lacks the investment clout to quickly replenish the lost potential.

Unocal is a bit of a red herring. It produces only 70,000 barrels per day in the United States, the majority of its production being in the Far East where it pumps large amounts of gas from beneath Thai and Burmese waters. It is Unocal’s Asian business that interests CNOOC, which has ambitions to expand its operations in the region. The Californian company’s Asian gas is sold locally and neither adds nor subtracts to American security by a single molecule of hydrocarbon energy.

But America continues to suffer from its post-9/11 insecurity and sees reds in the CNOOC bid. It is China’s urgent need for oil and gas that is driving up prices and the oil is going to China because demand is there, not because of a Communist plot. If the Chinese are prepared to invest $18 billion in making CNOOC a better oil company that is good for the world. A bigger and better CNOOC might find more oil in Asia and reduce the pressure on available supplies of crude, worldwide. That in turn would be good for America’s energy security.

Oil is fluid, dynamic, it moves under pressure. Lee Raymond knows it; he should tell those people in Washington.

[DanS]

I wouldn't mind seeing Chevron and CNOOC get into a bidding war and CNOOC winning. China has been paying premium prices for natural resources lately. The US should sell into those premium prices, as far as I'm concerned.

Chevron's got to do its part and up its bid.

[Dinner]

Besides I'd like to see the creation of a California based oil giant. Union Oil of California (Unocal) and Chevron-Texaco are both based in California so their merger would create a locally based industry titan.

[:) Smiley]

Yep, there's something wrong with China simply buying oil. Real countries invade Middle Eastern countries to get oil.