By Ben Geman - 07/27/12 10:49 AM EDT
Sen. Charles Schumer (D-N.Y.) says the United States should block CNOOC Ltd., a big state-owned Chinese oil company, from buying the Canadian oil company Nexen Inc. until China provides U.S. businesses better access to its markets.
The senior Democrat will make his case in a letter Friday to Treasury Secretary Tim Geithner, whose department heads the federal panel that vets foreign purchases of U.S. assets, according to accounts in Reuters and The Wall Street Journal.
His letter to Geithner says that the secretary should “withhold approval of this transaction until China's government has made tangible, enforceable commitments to ensure U.S. companies reciprocal treatment.”
“I believe approval of the Cnooc-Nexen transaction should be a test of these reciprocal commitments, and that concrete progress must be made by both sides simultaneously,” the letter states.
Schumer is a frequent critic of China’s trade policies. He tells the Journal that it’s time to play “hardball.”
Treasury heads the Committee on Foreign Investment in the United States, the interagency panel that reviews foreign purchases of U.S. businesses if the transactions could affect national security.
Nexen owns substantial acreage in the Gulf of Mexico and has some production there. If the CNOOC deal goes through, it would mark the first time that a Chinese company would be the operator of Gulf of Mexico leases, rather than a minority owner, according to Bloomberg.
CNOOC’s proposed $15 billion acquisition of Nexen is attracting political attention in the United States due to the Gulf holdings and because Nexen is a significant player in Canada’s oil sands.
“I have concerns about the deal, very definitely. I think it has to be looked at carefully,” said Sen. John Hoeven (R-N.D.) on Thursday.
Hoeven and other Republicans have pointed to the CNOOC-Nexen deal as they seek to bolster political support for the proposed Keystone XL pipeline, which would bring crude from Canadian oil sands to Gulf Coast refineries.
House and Senate Republicans have floated new bills in recent days that would authorize TransCanada Corp.’s proposed cross-border pipeline, which remains under Obama administration review. It's the latest of several GOP efforts to approve the project.
“Do we really want to be buying our oil, or Canadian oil, back from the Chinese? If we don’t take action to develop our resources and work with our closest friend and ally, Canada, that is exactly what is going to happen,” Hoeven said at a press conference Thursday, where he rolled out a sweeping bill to approve Keystone and expand U.S. oil-and-gas leasing.
Meanwhile, CNOOC has expanded its U.S. lobbying team as it seeks to acquire Nexen. The company brought on Hill & Knowlton in May, newly filed disclosure records show.
Hill & Knowlton, a prominent PR and lobbying company, is also helping to steer CNOOC through the Canadian government’s vetting process, according to press accounts.
In addition, CNOOC this month brought on the company Wexler and Walker Public Policy Associates for U.S. lobbying, records show.
CNOOC is undoubtedly seeking a smoother process than it faced in 2005, when the company drew Capitol Hill fury over its $18.5 billion bid for Unocal, a California-based multinational energy producer, and dropped the effort.
The unsuccessful deal prompted concerns about energy-hungry China locking down worldwide petroleum reserves. Unocal was instead purchased by Chevron Corp.