China firm attempts to cleanse bid image

LOS ANGELES — Chinese state-controlled oil and gas company CNOOC Ltd. is waging a high-stakes public relations campaign to focus its bid for U.S. energy producer Unocal Corp. on shareholder value, and away from politics.

The company has hired high-powered public relations and lobbying teams to steer Unocal shareholders, regulatory bodies, legis- lators and the media away from the notion that the proposed deal is an attempt by the Chinese government to deprive the United States of vital energy resources.

CNOOC's CEO Fu Chengyu wrote in a letter to Congress Monday that the company is eager to have the U.S. government scrutinize the national security implications of the deal — seeking to address concerns already circulating among lawmakers.

Even before CNOOC made public its $18.5 billion bid for Unocal last week, competing with a $16.6 billion deal with Chevron Corp., members of Congress sent President Bush a letter warning him of the threats posed by China's "pursuit of world energy resources."

A separate letter was passed around Congress late last week, also calling on the Bush administration to investigate — through the aegis of the Committee on Foreign Investment in the United States — the national security implications of the proposed deal.

In the face of such scrutiny, CNOOC has aggressively sought to paint its bid as a straight economic deal.

"This is a commercial deal, a commercial bid from one New York Stock Exchange-listed company to another New York Stock Exchange-listed company designed to improve shareholder value for both," said Mark Palmer, a managing director at Public Strategies Inc. of Austin, Texas, one of two public relations firms hired by CNOOC.

Public Strategies has close ties to President Bush. One of its top executives, Mark McKinnon, served as a media adviser to the Bush-Cheney campaign.

McKinnon is not working on the CNOOC account, and Bush spokesman Scott McClellan sidestepped a question about the firm's close administration ties at a press briefing Monday.

In his letter to Congress, Fu attempted to address some of the concerns the deal raises about America's energy security by noting that Unocal's oil and gas production amounts to less than 1 percent of all U.S. consumption.

He also reiterated his belief that CNOOC's all-cash offer would benefit the shareholders of Unocal and that substantially all of the company's U.S.-based workers would retain their jobs if the merger were completed.