U.S. lawmaker wary of CNOOC-Nexen deal

Nov. 29, 2012 at 7:54 AM
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WASHINGTON, Nov. 29 (UPI) -- The takeover of Canadian energy company Nexen by a state-run oil company in China could equate to a major U.S. wealth transfer, a U.S. lawmaker said.

Nexen announced this week that it, along with state-owned China National Offshore Oil Corp., reissued its voluntary request to the U.S. Committee on Foreign Investment to examine CNOOC's proposed $15 billion takeover.

The U.S. government needs to review the deal because Nexen has operations in the U.S. waters of the Gulf of Mexico.

U.S. Rep. Ed Markey, D-Mass., the ranking member of the House Natural Resources Committee, expressed concern that CNOOC could move into U.S. waters where leases were awarded under the 1995 Deep Water Royalty Relief Act, whereby oil companies don't pay royalties.

This, he said, would result in the "massive transfer of wealth" to the Chinese government through CNOOC.

"Either these leases need to be fixed so taxpayers are paid royalties or they need to be taken out of this deal," he said in a statement.

Credit Suisse was quoted Wednesday by the Platts energy news service as saying the resubmission was "unusual" but a sign that both sides were working to "seek closure in the U.S." The bank, said Platts, reported that Nexen's U.S. oil output represented less than 1-10th of 1 percent of total U.S. oil production for 2012.

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