China and the CNOOC Bid for Unocal: Issues for Congress [Updated February 27, 2006] [open pdf - 119KB]
"The bid by the China National Offshore Oil Corporation (CNOOC) to acquire the U.S. energy company Unocal for $18.5 billion raised many issues with U.S. policymakers. Even though CNOOC ultimately withdrew its bid in the face of considerable opposition from some Members of Congress and other commentors, many economic, financial, and security issues are still to be resolved...The question of whether the proposed acquisition would have posed a security threat to the United States ultimately would have been decided by the President after a review by the Committee on Foreign Investment in the United States (CFIUS). The policy debate centered on whether a company that is majority owned by China - a country some view as a potential military threat - should be allowed to acquire American assets that include vital energy supplies, dual use technology, or access to sensitive geographical locations. Would CFIUS give sufficient consideration to U.S. economic security? Should CFIUS be strengthened? Out of 1,500 transactions notified to CFIUS since 1988, it blocked only one. Other questions touched on whether blocking the bid would push the Chinese quest for secure oil supplies farther into countries such as Iran or the Sudan? Also, would blocking the bid affect Beijing's approval for U.S. investments in China? Are American companies seeking to invest in China given equivalent opportunities in that market?"
CRS Report for Congress, RL33093