WASHINGTON - U.S. Reps. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, and Ralph Hall, R-Texas, chairman of the House Energy and Commerce Subcommittee on Energy and Air Quality, yesterday sent a letter to President Bush, expressing their concern about China National Offshore Oil Corporation's (CNOOC) $18.5 billion acquisition bid for Unocal.

The full text of the letter follows:

June 27, 2005

The Honorable George W. Bush
The President of the United States
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20504

Dear President Bush:

As Congress pursues an energy bill to ensure the future of our country's energy security, we are compelled to express deep concern about the proposed acquisition of Unocal by the China National Offshore Oil Corporation (CNOOC), a company owned 70% by the government of the People's Republic of China. This transaction poses a clear threat to the energy and national security of the United States.

As you know, the United States today faces severe challenges to its energy security. Global demand for oil is at its highest level in history, growing by 3.5% in 2004 alone -- its fastest rate of growth since 1978. According to EIA, China accounted for approximately 40% of the increased demand in oil over the last four years, sending oil prices to record levels this year. In addition, supply is constrained, with EIA estimating global spare capacity of 1-1.5 million barrels per day, the lowest in 30 years, down from more than 7 million barrels per day in 2001. Industry experts predict that Chinese demand will continue its rapid growth over the next 15 years.

U.S. national energy security depends on sufficient energy supplies to support U.S. and global economic growth. But those supplies are threatened by China's aggressive tactics to lock up energy supplies around the world that are largely dedicated for their own use. China has used its state-owned oil companies to advance this strategy, by buying up energy assets around the world without regard to human rights and environmental protection, in countries such as Sudan and Iran. And unlike other companies, these resources are not available to the global market.

CNOOC's bid to acquire Unocal is simply the latest, and most significant, step in this strategy. If approved, the transaction would put vital oil assets in the Gulf of Mexico and Alaska directly into the hands of a company controlled by the government of China. This would be directly contrary to the goal of enhanced energy independence embodied in H.R. 6 as passed by the House.

In addition to this obvious threat to our energy security, the acquisition of Unocal by a Chinese state-owned company poses other risks to our U.S. national security. As a significant player in the U.S. energy industry, Unocal uses a host of highly advanced technologies necessary for the exploration and production of oil and gas. Many of these technologies have dual-use applications. Given the potential military threat posed by China to our allies in Asia and our security interests, it is of the utmost importance that U.S. export control laws be strictly applied to ensure that no sensitive technology falls into the hands of the Chinese government - or, through China, other, more dangerous regimes around the world - which can later be used to undermine our national security.

We urge you to protect American national security by ensuring that vital U.S. energy assets are never sold to the Chinese government. The Chinese are great economic and political rivals, not friendly competitors or allies in democracy. This sale would be a mistake under almost any circumstance, but it would be especially egregious at a time when energy markets are so tight and the U.S. is becoming even more dependent on foreign sources of energy.

Sincerely,

Joe Barton
Chairman

Ralph M. Hall
Chairman
Subcommittee on Energy and Air Quality