Panel Backs Delay of Any CNOOC Deal

CNOOC Ltd.’s $18.5-billion takeover bid for Unocal Corp. has been dealt a setback by a congressional vote delaying the approval of any deal, but the Chinese oil company is far from out of the race to scoop up the U.S. oil and gas producer, market observers say.

Late Monday, a U.S. Senate-House conference committee finalizing a broad energy bill voted to approve a delay of as many as 141 days in a Bush administration review of CNOOC’s bid for Unocal.

The development makes CNOOC’s task in persuading Unocal and its shareholders to approve its offer much harder, since political opposition to the Chinese bid -- which is higher than a competing $17-billion bid from Chevron Corp. -- was one of the chief reasons the Unocal board shied away from accepting it.

“It is a big setback,” said Jeff Hayden, an analyst with Pickering Energy Partners, an energy research firm. “I don’t think it’s the end of the road, but they’re in a wait-and-see mode.”

But at least one proponent of the Chinese offer said the outcome of the vote could have been much worse and would not derail the CNOOC bid.

“Compared to the proposal put forward, the terms of the amendment are only modestly extending the time period, and it really doesn’t affect the ultimate outcome,” said Peter Schoenfeld, chief executive of P. Schoenfeld Asset Management, which holds more than 1 million Unocal shares.

Schoenfeld has publicly urged Unocal’s board to consider the CNOOC offer.

Initially, negotiators from the House wanted a longer 180-day study and sought to prevent the Committee for Foreign Investment in the United States from beginning a review of CNOOC’s offer to purchase Unocal until after the study was finished.