Terry Everett, July 18, 2005

The world's restricted supply of oil and gas has a potential negative impact beyond the pocketbook of the average American driver. It could also pose national security risks for us as nations compete for ever-tightening energy sources to drive both their economies and their defense capabilities. China's ongoing attempt to acquire an American-owned energy corporation raises serious concerns over our ability to protect our strategic interests.

The issue at hand is the sale of American-owned UNOCAL Corporation, the country's ninth largest crude oil and natural gas company. Currently, several companies are bidding to take over UNOCAL, including American-owned CHEVRON. Such a sale might not garner much attention beyond the financial markets if it were not for the fact that the People's Republic of China is also making a bid for the company and its energy rights.

California-based UNOCAL may not be a household name to the American consumer, but the company has significant interests in Southeast and Central Asia. It is both a major supplier of natural gas in the region and a key investor in pipelines spanning the Central Asian oil fields and crossing Azerbaijan, Georgia, and Turkey. America's access to the region's energy reserves is vital for both economic and national security reasons. A foreign country gaining control over these interests would certainly place us at a disadvantage in both access to energy and in forging political agreements within the region. The latter is important to the United States as both a world power and the leader of the war on terror - a global effort dependent upon the cooperation of our allies in Central and Southeast Asia.

Congress has already expressed strong concern over the potential sale of UNOCAL to the China National Offshore Oil Corporation (CNOOC). On June 30th, the U.S. House passed both an amendment to the annual Treasury appropriations bill and a separate resolution calling for scrutiny of the potential sale of UNOCAL to communist China. Last week, the House Armed Services Committee held a hearing to probe the impact of a possible Chinese acquisition of UNOCAL on our national security.

China certainly recognizes the significance of this potential acquisition to its economy and future ability to gain greater political influence over the region in which UNOCAL is heavily involved. It has made this purchase a major priority and even went so far as to verbally assail the U.S. House's June 30th votes. The Chinese Foreign Ministry had this to say, "We demand that the U.S. Congress correct its mistaken ways of politicizing economic and trade issues and stop interfering in the normal commercial exchanges between enterprises of two countries."

CNOOC is not merely a Chinese-owned company run by business people answering to investors as their government would have us believe. It is, in fact, state-owned and state-financed. The Chinese government owns over 70 percent of the CNOOC, and the company's chairman, Fu Chengyu, has major connections to the Chinese Communist Party. This is no "normal commercial exchange."

China's suggestion that Congress in effect "butt out" is reflective of that country's determination to expand its influence and also its perhaps willful misunderstanding of the role of Congress in our democracy - an alien concept to a totalitarian government.

I say this clearly so the Chinese Politburo can understand it. The United States Congress will exercise its right to investigate any foreign sales of American companies which might negatively impact our national security.

Congressman Terry Everett, a Republican, represents Alabama's Second Congressional District, which includes the state capitol, Montgomery.