Press Release

Jul 30, 2012

Markey: CNOOC-Nexen Merger Could Allow Chinese Government Company to Drill For Free Off U.S. Coasts

Issues: Oil

 

Lawmaker Calls for Blocking Planned Merger If Chinese Company Doesn’t Agree to Pay Royalties

WASHINGTON (July 30, 2012) – A merger between the Chinese government’s state-run oil company CNOOC and the Canadian oil company Nexen could result in China drilling for free on U.S. soil, depriving taxpayers of millions of dollars in royalties for taxpayer-owned oil, Rep. Ed Markey (D-Mass.) today revealed.

In response to this potential merger and the loss of taxpayer money to the Chinese government’s benefit, Rep. Markey today sent a letter to Secretary Tim Geithner highlighting the fact that Nexen has already drilled 32 million barrels of oil and 34 billion cubic feet of gas for free without paying a dime to American taxpayers in royalties and that this giveaway could transfer directly to the Chinese government-owned company if the merger goes forward as planned.

Secretary Geithner is the chair of the Committee on Foreign Investment in the United States, which has the authority to review foreign investments in the United States if it has ramifications for American national security.

“I believe this merger could lead to 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,” writes Rep. Markey, who is the Ranking Member of the Natural Resources Committee, which has jurisdiction over offshore oil drilling issues. “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.”

According to documents provided by the Department of Interior to Rep. Markey, Nexen’s U.S. subsidiary holds ownership in 233 active offshore leases in U.S. federal waters totaling nearly 1.3 million acres in the Gulf of Mexico. Included in these holdings are at least two leases issued by the Interior Department under the Deep Water Royalty Relief Act (DWRRA) of 1995 under which oil companies are not paying any royalties.

The Markey letter to Secretary Geithner can be found HERE