Rep. Richard Pombo (R-CA) proposed a protectionist amendment to energy legislation that is designed to derail CNOOC Ltd’s acquisition of Unocal. Pombo’s proposal “would require the Energy Department to identify all of the energy assets China has sought to invest in [and] review whether China’s investments in energy assets have been done on market-based terms free of government subsidiesâ€¦” The purpose of this probe is to portray China an unfair trader that does not play on a level playing field with U.S. firms.
Well, one asset CNOOC has sought to invest in is Unocal, the recipient of $400 million in loans and guarantees from the U.S. government. The subsidies went to Unocal and its partner, the Indonesian state oil and gas company, to develop the West Seno offshore crude oil and natural gas fields. Production from these projects is destined for Asian petroleum markets, so U.S. subsidies are helping China and other Asian countries acquire energy at below-market rates.
The U.S. government is second to none in the game of creating an un-level playing field. As Charles Featherstone has pointed out, Pombo and other congressmen have received significant and timely campaign contributions from rival Unocal suitor Chevron.