Mikkal Herberg on Chinese Oil Companies
The Return of CNOOC
10/16/2012
Arabic Knowledge@Wharton
Seven years ago, the China National Offshore Oil Corporation (CNOOC) debuted on the world stage with a thud. When its US$18.5 billion bid for California's Unocal Oil Co. collapsed in 2005, CNOOC became the poster child for the political perils of the U.S. approval process for foreign investments. The specter of a Chinese state-owned oil company owning a key U.S. asset kicked up such a firestorm that CNOOC withdrew its bid, and Chevron Corp. scooped up the deal.
Now, during a U.S. presidential election where China is a lightning rod, CNOOC has launched a high-profile comeback. This time, it is betting on a different outcome for its proposed US$15.1 billion acquisition of Canadian oil company Nexen, Inc. If approved, the deal, announced July 23, will mark the largest overseas acquisition yet by a Chinese company. With its 61% premium offer and promises to maintain Nexen's employees and headquarters in Calgary, CNOOC believes chances for Canadian approval by the end of this year are high.
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Mikkal Herberg is a senior lecturer on international and Asian energy at the Graduate School of International Relations and Pacific Studies, University of California, San Diego. He is also the BP Foundation Senior Research Fellow for International Energy at the Pacific Council on International Policy and also serves as research director on Asian energy security at The National Bureau of Asian Research.
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