Word: cnooc
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...Chengyu, chief executive officer of CNOOC, is the driving force behind its controversial takeover bid for U.S. oil giant Unocal. A fluent English speaker with a degree in petroleum engineering from the University of Southern California (he's currently a few courses shy of an M.B.A.), Fu met with TIME recently in Beijing to explain why a merger should make sense to Unocal, Washington and his own shareholders...
...TIME: Why is buying Unocal a good deal for CNOOC? Fu: We are a value-driven company. We look at Unocal's assets?both the reserves it has already discovered as well as undeveloped [oil and gas] properties it owns?as a very good strategic fit for us. We are in the oil and gas business in Asia and so is Unocal...
...TIME: How do you respond to critics who say this is a diversion from CNOOC's previous strategy of bringing liquefied natural gas back to China and shipping it into booming markets on the coast and inland. After all, most of the gas Unocal owns in Asia is already under contract in countries like Thailand and Bangladesh, so it can't be exported back for use in China. Fu: This is in no way a diversion. There is potential for gas in the undeveloped properties Unocal has in Indonesia, for example. Second, the other gas businesses there are good assets...
...Unocal is by far the most audacious move any Chinese company has made. CNOOC, whose market value is only about $22 billion (compared with $119 billion for Chevron), offered about $18.5 billion, or $67 a share, for Unocal. Since it's an all-cash offer, the Chinese company would have to take on a huge chunk of debt to finance the deal. Fu insists that no one in the government pushed the company to buy Unocal, and sources close to CNOOC's board tell TIME that Fu, not some shadowy string-pulling figure in Beijing, has been the driving force...
...business" approach won't mute the deal's critics in Washington. To them, a takeover of Maytag is one thing--"We don't go to war over washing machines," said Republican Congressman Richard Pombo of California--but energy is a different story. With the Chinese government subsidizing the deal--CNOOC's parent company, wholly owned by the state, will give it an $8.5 billion, 30-year loan at just 3.5% interest--cries of predatory financing are inevitable. So too are complaints (accurate enough) that there is little chance a Western oil major could buy outright one of China's biggest...