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China’s largest overseas expansion causes turmoil in Washington

27th July 2012

US O&G regulator could block CNOOC’s USD 15.1bn bid for Canadian Nexen

China’s largest overseas expansion causes turmoil in Washington
Some 10 per cent of Nexen’s assets are located in US territory, in the oil rich Gulf of Mexico, which has made Washington wary of the foreign takeover

China’s energy expansion overseas, ushered by state-run CNOOC’s recent bid for Canadian oil major Nexen, has caused political turmoil in Washington which could affect the outcome of the oil deal, it emerged on Friday.

 

"Chinese NOCs have been careful to limit any acquisitions of US energy assets to small shares of joint ventures, never taking on operatorship and limiting their own access to American technology, in order to avoid congressional opposition,” associate fellow at Chatham House Valerie Marcel told OGT.

 

Some 10 per cent of Nexen’s assets are located in US territory, in the oil rich Gulf of Mexico, which has made Washington wary of the foreign takeover.

 

“They must have assumed their interests in Canada concerned only Ottawa, which has courted Chinese investments,” Marcel added.

 

A high-profile US senator stressed that the oil deal should only be approved if Beijing provides reciprocal and “tangible” market access for investment from US firms.

 

Other members of congress have also voiced concerns about the takeover and called for a thorough review by the Committee on Foreign Investment in the United States (CFIUS).

 

CFIUS will review CNOOC’s USD 15.1bn bid for Nexen, the largest foreign acquisition by a Chinese firm.

 

CNOOC asked for a voluntary review by CFIUS after it announced its bid on Monday, but the start date for the review is still unknown, sources said.

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