Representative Edward Markey (D.-Mass.) sent a letter to Treasury Secretary Timothy Geithner on July 30 asking the U.S. government to block the proposed acquisition of Canadian oil company Nexen by CNOOC, China’s state-owned oil company. Because Nexen holds leases for oil drilling in U.S. waters in the Gulf of Mexico, which represent about 10 percent of the firm’s assets, the proposed Chinese-Canadian merger is subject to U.S. approval.
Geithner also serves as chairman of the Committee for Foreign Investment in the United States (CFIUS), which reviews the national security implications of foreign investments in U.S. companies or operations.
In his letter to Geithner, which was quoted by The Hill, the Massachusetts Democrat wrote:
I believe this merger could lead to a massive transfer of wealth from the American people to the Chinese government, and I strongly urge you to block this proposed transaction until, at a minimum, parties to the merger agree to pay royalties to the U.S. taxpayer on all oil produced off American shores or relinquish any ownership interests in these leases.
Giving valuable American resources away to wealthy multi-national corporations is wasteful, but giving valuable American resources away to a foreign government is far worse: it has the potential to directly undermine American economic and national security.
A report in the Wall Street Journal explained that Nexen is currently exempt from paying royalties on its oil production in the Gulf because its leases were issued by the Interior Department under the Deep Water Royalty Relief Act.
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Photo: Rep. Ed Markey (D-Mass.) speaks during a joint hearing of the Subcommittee on Energy and Power and the Subcommittee on Environment and the Economy, March 16, 2011: AP Images