States to Weigh In on Unocal Offer

California Atty. Gen. Bill Lockyer and other state attorneys general plan to press for assurances that a proposed purchase by Chinese oil firm CNOOC Ltd. wouldn’t undermine Unocal Corp.’s obligations to U.S. environmental cleanup projects and to provide employee pension and healthcare benefits, a Lockyer spokesman said Tuesday.

The development comes amid strained relations between the United States and China over trade and other matters, and as congressional legislators continue to fret that the $18.5-billion offer from CNOOC would threaten national and economic security. Unocal’s board is weighing the bid against a $16.8-billion offer from Chevron Corp.

Lockyer, echoing worries of officials in New Mexico, Pennsylvania, Montana and Texas, will send a letter to Unocal executives as early as today expressing concerns about the enforceability of various cleanup pacts and other agreements if the El Segundo oil company is bought by CNOOC, said Tom Dresslar, Lockyer’s spokesman.

“An acquisition by a foreign-owned entity injects uncertainty in terms of meeting environmental cleanup obligations and protecting retired workers’ pensions and healthcare benefits,” Dresslar said. Each of those states has worries about how a sale of Unocal to CNOOC would affect their ability to force a foreign company to pay up for ground and water cleanup, he said.

In New Mexico, for example, a Unocal subsidiary operates an open-pit mine, said Sam Thompson, spokeswoman for that state’s attorney general, Patricia A. Madrid. “Were the owner of the corporation to be outside the United States, it might make it more difficult for states to be compensated for damage to natural resources.”

Texas Atty. Gen. Greg Abbott has agreed to sign the letter with Lockyer; the other three attorneys general were interested but hadn’t yet signed, Dresslar said.

Mark Palmer, a spokesman for CNOOC, said the Chinese company “would be honored to abide by all of the laws of the state of California.” Unocal spokesman Mike Thatcher declined to comment Tuesday because the company had not received the letter.

Operations based in the United States are generally subject to U.S. laws no matter who the owner is, said James White, president of White Environmental Associates in Brea.

But in Unocal’s case, there are cleanup obligations from past operations and Lockyer wonders what would happen to Unocal’s environmental liabilities if CNOOC sells U.S. operations and only those liabilities remain, Dresslar said.

“That’s a real good question,” said White, an environmental consultant to the oil industry. “The attorney general may have some valid concerns regarding assets that are no longer operational in the United States.”

However, it wasn’t clear what influence the attorneys general could have on any transaction.

CNOOC , 71% owned by state-controlled China National Offshore Oil Corp., offered in late June to buy Unocal for $18.5 billion in cash, or $67 a share.

The unsolicited offer came more than two months after Unocal agreed to be bought by San Ramon, Calif.-based Chevron Corp. in a stock-and-cash deal valued at about $61.49 a share, or $16.8 billion, as of Tuesday. Unocal shareholders vote on the Chevron proposal Aug. 10.

“We’re not taking a position on who should win the vote of Unocal shareholders,” Dresslar said Tuesday. “We’re representing the concern of the people of the state of California. What we’re asking for are assurances.”

The Chinese government, meanwhile, voiced its displeasure at how CNOOC’s offer was being received in Washington.

China’s Ministry of Foreign Affairs issued a statement Monday: “We demand that the U.S. Congress correct its mistaken handling of politicizing economic and trade issues, and stop interfering in the normal commercial exchanges between enterprises of the two countries.”

The criticisms and growing antagonism over CNOOC’s bid add to the tense commercial relations between China and the U.S. and come as officials of the two countries are preparing to meet Monday in Beijing at the U.S.-China Joint Commission on Commerce and Trade.

Beijing and Washington have been wrangling over China’s textile exports, its currency and protection of intellectual property rights, among other issues.

Chevron shares rose $1.59 to $58.56; Unocal stock fell 32 cents to $65.52.

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Times staff writer Don Lee in Shanghai contributed to this report.