CNOOC’s withdrawal leaves Chevron to complete its US$17.4 billion bid for Unocal, which is now expected to be little more than a formality once Unocal shareholders vote on the Chevron takeover on August 10.
Analysts said the Unocal battle, which put CNOOC on the world oil and gas stage, would not stop China – now the world’s second largest energy consumer after the US – in its hunt for energy reserves.
CNOOC and other Chinese petroleum companies are now expected to turn their attention to European and Australian oil and gas assets.
With CNOOC already having a stake in the North West Shelf, the project’s operator Woodside is seen as a likely takeover target, but the last bid for Woodside, by Royal Dutch/Shell in 2001, was rejected by the Australian government over concerns about ceding control of Australia's largest natural resource project to a foreign company.
Any offer would have to be vetted by the Foreign Investment Review Board.
CNOOC could also target European and UK companies such as BG Group, which is valued at $30 billion but has more attractive assets than Unocal, including LNG technology, which is critically important for China, the Times of London suggested.
CNOOC said it was disappointed that political factors had casued its bid for Unocal to fail.
The Unocal board had already indicated it preferred the bid from Chevron because of the political uncertainties surrounding offer from CNOOC, which is 71% owned by the Chinese government.
The United States Congress moved last month to block its bid by calling for government departments to assess the overall impact on the US of China's growing thirst for energy. This would have drawn out the bidding process by several months.
CNOOC announced its withdrawal yesterday, saying in a statement on its website that it still believed a CNOOC-Unocal combination would have created a strong and successful oil and gas company, focused on the fast growing Asian economy, “to the benefit of our shareholders and the employees of both companies.”
It said its fully-financed offer had represented a premium of approximately US$1 billion above the Chevron current competing bid and was “clearly superior value for Unocal shareholders”.
It had also initiated a voluntary filing with the US Committee on Foreign Investment to allay any concerns and would have considered improving its offer but for the US political environment.
“The unprecedented political opposition that followed the announcement of our proposed transaction, attempting to replace or amend the CFIUS process that has been successfully in operation for decades, was regrettable and unjustified.”
“This political environment has made it very difficult for us to accurately assess our chance of success, creating a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction. Accordingly we are reluctantly abandoning our higher offer to the clear disadvantage of Unocal shareholders and employees.”
The Chinese governmenta could retaliate against US oil by opening doors wider to European majors, including BP, Shell and Total, UK analysts told the times of London.
