[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 344 Introduced in House (IH)]






109th CONGRESS
  1st Session
H. RES. 344

  Expressing the sense of the House of Representatives that a Chinese 
state-owned energy company exercising control of critical United States 
energy infrastructure and energy production capacity could take action 
   that would threaten to impair the national security of the United 
                                States.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 29, 2005

Mr. Pombo (for himself, Mr. Oxley, Mr. Hunter, Mr. Barton of Texas, Mr. 
   Ney, and Mr. Hyde) submitted the following resolution; which was 
referred to the Committee on Financial Services, and in addition to the 
 Committee on International Relations, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                               RESOLUTION


 
  Expressing the sense of the House of Representatives that a Chinese 
state-owned energy company exercising control of critical United States 
energy infrastructure and energy production capacity could take action 
   that would threaten to impair the national security of the United 
                                States.

Whereas oil and natural gas resources are strategic assets critical to national 
        security and the Nation's economic prosperity;
Whereas the global demand for oil and natural gas is at the highest levels in 
        history;
Whereas the global excess capacity of oil production, at between 1,500,000 and 
        2,000,000 barrels per day, is at its lowest level in the past several 
        decades, contributing to world oil prices reaching historic highs of 
        above $60 per barrel;
Whereas natural gas globally is the fastest growing component of primary energy 
        consumption, projected to increase by nearly 70 percent by 2025;
Whereas the National Security Strategy of the United States approved by 
        President George W. Bush on September 17, 2002, concludes that the 
        People's Republic of China remains strongly committed to national one-
        party rule by the Communist Party;
Whereas China's daily consumption of crude oil grew by nearly 850,000 barrels in 
        2004, accounting for more than one-third of the increase in world demand 
        for oil in 2004;
Whereas China's consumption of crude oil is expected to grow by an additional 
        7.5 percent in 2005, and world oil prices are projected to rise 
        significantly as a result of increasing demand from China for oil;
Whereas notwithstanding the increasing demand from China for oil, domestic 
        Chinese output of oil has remained relatively stagnant;
Whereas on June 23, 2005, the China National Offshore Oil Corporation (CNOOC) 
        announced its intent to acquire Unocal Corporation, in the face of a 
        competing bid for Unocal Corporation from Chevron Corporation;
Whereas the People's Republic of China owns approximately 70 percent of CNOOC;
Whereas a significant portion of the CNOOC acquisition is to be financed and 
        heavily subsidized by banks owned by the People's Republic of China;
Whereas Unocal Corporation is based in the United States, and has approximately 
        1,750,000,000 barrels of oil equivalent, with its core operating areas 
        in Southeast Asia, Alaska, Canada, and the lower 48 States;
Whereas CNOOC has made various representations about its intention to sell oil 
        developed in the Gulf of Mexico to the United States, but has not made 
        any commitment to sell other natural gas and oil it develops into global 
        energy markets instead of shipping it directly to China;
Whereas a CNOOC acquisition of Unocal Corporation would result in the strategic 
        assets of Unocal Corporation being preferentially allocated to China by 
        the Chinese Government;
Whereas a Chinese Government acquisition of Unocal Corporation would weaken the 
        ability of the United States to influence the oil and gas supplies of 
        the Nation through companies that must adhere to United States laws;
Whereas Unocal Corporation was responsible for the production of energy 
        equivalent to approximately 411,000 barrels of oil per day in 2004, 
        which is approximately one-third of all global excess oil production 
        capacity;
Whereas CNOOC's control of Unocal Corporation's productive capacity would mean 
        control of approximately one-third of all global excess oil production 
        capacity;
Whereas the petroleum sector uses a range of sensitive technologies for 
        exploration (such as seismic analysis and processing, downhole logging 
        sensors, and modeling software), production, and refining (such as 
        processing technologies and equipment), including technologies that have 
        ``dual-use'' commercial and military applications;
Whereas several of the technologies used in oil and energy production require 
        export licensing for export from the United States to China;
Whereas the CNOOC acquisition of Unocal Corporation could provide access to 
        Unocal Corporation's sensitive dual-use technologies that the United 
        States would otherwise restrict for export to China;
Whereas oil companies owned by the People's Republic of China are active in 
        parts of the world, such as Sudan and Iran, that are subject to United 
        States sanctions laws, and the national security of the United States is 
        threatened by the export of sensitive, export controlled, and dual-use 
        technologies to such countries;
Whereas barriers to the ability of the United States Government to enforce 
        export controls and sanctions could pose a direct threat to the national 
        security of the United States; and
Whereas section 721 of the Defense Production Act of 1950 (50 App. U.S.C. 2170) 
        authorizes the President to suspend or prohibit any foreign acquisition, 
        merger, or takeover of a United States corporation that threatens the 
        national security of the United States, if the President finds that 
        ``there is credible evidence that leads the President to believe that 
        the foreign interest exercising control might take action that threatens 
        to impair the national security'' and other provisions of law ``do not 
        in the President's judgment provide adequate and appropriate authority 
        for the President to protect the national security'': Now, therefore, be 
        it
    Resolved, That it is the sense of the House of Representatives 
that--
            (1) the Chinese state-owned China National Offshore Oil 
        Corporation, through control of Unocal Corporation obtained by 
        the proposed acquisition, merger, or takeover of Unocal 
        Corporation, could take action that would threaten to impair 
        the national security of the United States; and
            (2) if Unocal Corporation enters into an agreement of 
        acquisition, merger, or takeover of Unocal Corporation by the 
        China National Offshore Oil Corporation, the President should 
        initiate immediately a thorough review of the proposed 
        acquisition, merger, or takeover.
                                 <all>