Robert Johnston
Eurasia Group
The 2005 failed transaction between CNOOC and Unocal has become the touchstone for the geopolitical complications that emerge when the interests of state-owned national oil companies and publicly-held private international oil companies clash. Yet from the perspective of 2010, there are multiple reasons to think that this perception is no longer accurate. Indeed, the emerging trends in the Alberta oilsands, – as well as other frontier/high cost markets such as global shale gas, Australian LNG, and the emerging Iraqi oil play – suggest a new model for cooperation. Such a model will remain constrained at times by the vagaries of bilateral political relationships, but the trend toward cooperation is strong.
In 2005, CNOOC, one of the three major Chinese national oil companies, made a bid to acquire Unocal, one of the largest US independent petroleum producers. While Unocal was a US-based company, many market observers believed that the CNOOC interest in Unocal was driven by its portfolio of deepwater projects in Asia that would complement CNOOC’s own offshore interests. The acquisition created a political firestorm in Washington, that ultimately led CNOOC to withdraw its bid and Unocal ultimately was acquired by Chevron.
The Unocal case drew new attention among policy-makers and market participants with respect to the activities of China’s NOCs. Coming on the back of a major spike in Chinese oil imports in 2004, Chinese oil demand growth and energy security became – and remains – a dominant theme in global oil geopolitics.
