FINANCIAL TIMES: Majors covet Unocal while wary of China: “Cnooc's interest has prompted a number of large international rivals - including Royal Dutch/Shell, BP, Eni, ChevronTexaco and a handful of US "independents" - to consider making offers of their own…” (ShellNews.net) 4 March 05
By James Politi in New York and Doug Cameron in Houston
Published: March 4 2005
International oil groups deciding whether to bid for Unocal are having to balance their desire to acquire the $14bn energy group with a wish not to upset the Chinese government, bankers say.
China National Offshore Oil Corporation (Cnooc), one of the country's largest state-owned oil groups, has for months been exploring a takeover offer for California-based Unocal, in what would mark a landmark overseas expansion by a Chinese company.
Cnooc's interest has prompted a number of large international rivals - including Royal Dutch/Shell, BP, Eni, ChevronTexaco and a handful of US "independents" - to consider making offers of their own, according to people close to the companies.
But potential acquirers may be holding back out of a fear that any pre-emptive bid would damage their standing in Beijing.
Due to its soaring demand for energy, China is emerging as an increasingly important customer and a place to do business for many international oil companies.
"A very delicate chess game is being played around Unocal," said one senior mergers and acquisitions banker in New York. Some potential acquirers were thinking about a more aggressive strategy, while others were planning to be more prudent, he added.
Rather than bidding for Unocal before Cnooc decided whether to table its own offer - the more aggressive approach - western suitors could wait for the Chinese group to drop its ambitions and then make a move, another US energy banker said.
Yesterday, Unocal shares, which have rallied because of rising oil prices and investors' hopes that the company could be sold, rose a further 9.8 per cent to $58.75 in morning trading.
Long considered a takeover target among the US "independent" oil companies, Unocal's most attractive assets are in Indonesia and Azerbaijan. It also has a collection of US assets, which are generally considered second-tier and might be sold in any acquisition.
The jostling for position around Unocal comes amid expectations of another round of consolidation among the US's many midsize independent oil and gas groups. Thanks to soaring crude prices, the sector has piles of cash.