CNOOC: Unocal Bid Not About Politics
Associated Press | Jun3 27, 2005
By GARY GENTILE
Chinese state-controlled oil and gas company CNOOC Ltd. is waging a high-stakes public relations campaign to focus its bid for U.S. energy producer Unocal Corp. on shareholder value, and away from politics.
The company has hired high-powered public relations and lobbying teams to steer Unocal shareholders, regulatory bodies, legislators and the media away from the notion that the proposed deal is an attempt by the Chinese government to deprive the U.S. of vital energy resources.
CNOOC's CEO Fu Chengyu wrote in a letter to Congress Monday that the company is eager to have the U.S. government scrutinize the national security implications of the deal — seeking to address concerns already circulating among lawmakers.
Even before making public its $18.5 billion for Unocal last week, competing with a $16.6 billion deal with Chevron Corp., members of Congress sent President Bush a letter warning him of the threats posed by China's "pursuit of world energy resources."
A separate letter was passed around Congress late last week, also calling on the Bush administration to investigate — through the aegis of the Committee on Foreign Investment in the United States — the national security implications of the proposed deal.
In the face of such scrutiny, CNOOC has aggressively sought to paint its bid as a straight economic deal.
"This is a commercial deal, a commercial bid from one New York Stock Exchange listed company to another New York Stock Exchange listed company designed to improve shareholder value for both," said Mark Palmer, a managing director at Public Strategies Inc. of Austin, Texas, one of two public relations firms hired by CNOOC.
Public Strategies has close ties to President Bush. One of its top executives, Mark McKinnon, served as a media adviser to the Bush-Cheney campaign.
McKinnon is not working on the CNOOC account, and Bush spokesman Scott McClellan sidestepped a question about the firm's close administration ties at a press briefing Monday.
In his letter to Congress, Fu attempted to address some of the concerns the deal raises about America's energy security by noting that Unocal's oil and gas production amounts to less than 1 percent of all U.S. consumption.
He also reiterated his belief that CNOOC's all-cash offer would benefit the shareholders of Unocal and that substantially all of the company's U.S.-based workers would retain their jobs if the merger were completed.
"We know this bid is historic for both companies and will be closely scrutinized by everyone involved," he said. "I want you to know that we encourage that review and welcome the opportunity to participate."
Last week, CNOOC also said it would continue to sell "substantially all" of the crude oil and natural gas produced by Unocal domestically to the U.S. market.
Even the choice of words is an issue. CNOOC has been framing its bid as a "friendly" offer and has objected to media describing the bid as "hostile" or even "unsolicited."
The company points out that Unocal had invited bids from companies, including CNOOC, before accepting Chevron's offer. CNOOC submitted its bid after the agreement between Chevron and Unocal only because its board insisted on doing an independent review of the transaction, delaying its offer.
CNOOC also notes that four of its eight board members are independent, non executive members in keeping with Securities and Exchange Commission guidelines for corporate governance. Those four are non-Chinese and the company's business, including board meetings, are conducted in English, the company points out.
CNOOC's lobbying and public relations effort also is focused on correcting what it sees as an outdated image of Unocal as an American oil and gas company.
The vast majority of Unocal's reserves are located in Asia and the company that once was famous for its "Union 76" filling stations sold that business long ago.
Unocal shares rose 32 cents, or 0.5 percent, to close at $66 on the New York Stock Exchange. Share for CNOOC Ltd. American Depositary Share rose 86 cents, or 1.6 percent, to $55.76, on the NYSE.