Republicans say China oil deal highlights U.S. inaction

Fri Jul 27, 2012 2:46am IST

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* Senators propose more drilling, pipeline approval

* Concerned about CNOOC-Nexen deal

* Stop short of saying U.S. government should block it

By Roberta Rampton

WASHINGTON, July 26 (Reuters) - China's plan to gain a bigger foothold in North American oil production shows the U.S. government needs a more aggressive energy policy, a group of influential Senate Republicans said on Thursday.

The senators said they were concerned about the bid by China's state oil company CNOOC for the Canadian oil company Nexen, but they stopped short of saying that the U.S. government should try to do something to stop it.

"I have concerns about the deal, very definitely. I think it has to be looked at carefully. I think I'll stop there for right now," said Senator John Hoeven, when asked at a news conference whether the U.S. government should intervene.

"But the real point is, we should be developing these resources, not having the Chinese government acquiring them," said Hoeven, a North Dakota senator whose home state has become the nation's second-largest oil producer.

"Do we really want to be buying our oil or Canadian oil back from the Chinese? If we don't take action to develop our resources and work with our closest friend and ally Canada, that's exactly what's going to happen," Hoeven said.

Hoeven was joined by Senate Republican Leader Mitch McConnell to unveil a package of energy proposals that would allow for more drilling on government-owned land, reduce regulations, streamline drilling permits, and approve the Keystone XL pipeline carrying oil from Canada.

The Republican-controlled House of Representatives has already passed many of the familiar proposals, which have virtually no chance of being brought forward by the Democratic-controlled Senate.

But Senator John Cornyn, who heads the Senate Republican Campaign Committee, said the proposal is "a very concrete blueprint" for what would happen if Republicans gain power in the White House and Senate in the Nov. 6 elections.

OBAMA KEYSTONE DELAY FAULTED

The senators blame President Barack Obama's delay in approving TransCanada's pipeline for pushing Canada's government to more aggressively explore oil deals with China.

Obama has said a portion of the pipeline going through Nebraska needed more environmental review after the route was adjusted to avoid an ecologically sensitive area.

The incident helped Canada see the need to advance its economic relationship with China, Canada's former industry minister said in an opinion piece in the Globe and Mail newspaper on Thursday.

"While we were slow to realize it, a country that has only one customer for its most valuable export is in constant peril, even if that customer is your best friend. U.S. President Barack Obama has reinforced just how significant that risk is," Jim Prentice wrote.

In buying Nexen, CNOOC will gain access to Canada's oilsands as well as some holdings in the Gulf of Mexico.

"I'm concerned because it's really a trend, particularly in the Gulf of Mexico," said Louisiana Senator David Vitter.

"I don't know enough about it to know whether it should be blocked through any American, U.S.-based law. But I do think the far better alternative is for us to play offense, and for us to be developing, taking advantage of these energy resources," Vitter told Reuters.

Because of those holdings, the national security elements of the China-Canada deal may be scrutinized by the powerful Committee on Foreign Investment in the United States.

When CNOOC tried in 2005 to take over American oil company Unocal, there was an immediate political backlash.

Republican Congressman Randy Forbes, who helped lead congressional opposition to the failed Unocal bid, said he doesn't like the CNOOC-Nexen bid, but feels he cannot do much about it because it is a Canadian company.

"Whatever we would do would simply be talking in the wind, because we don't have any legal authority to stop this action," Forbes said in an interview on Wednesday.

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