China National offshore Oil Corporation Vs. Chevron

China National Offshore Oil Corporation vs. Chevron

Negotiation Situations

The negotiation that our group chose was between China National Offshore Oil Corporation (CNOOC) and Chevron and their attempts to buy Unocal, an American oil company. Both parties felt it was crucial to gain vital control of limited energy resources, which Unocal could provide. A major difference between CNOOC and Chevron was each company’s host countries and their cultures.

There were many entities involved that had separate, but very important perspectives on the situation at hand in this negotiation. The primary reason for choosing this particular topic was because of the heated emotion and mass publicity and it generated.

The parties involved in this particular negotiation were China National Offshore Oil Corporation (CNOOC), Chevron, Unocal, the Chinese government, the United States government, financial advisors, privately hired consultants and several lobbyists. CNOOC‘s purpose for a bid was to gather control of limited and scarce resources that would allow them to support their continuously growing population. Chevron’s interest in Unocal was to acquire additional control and market share. The Chinese government’s involvement was through guarantees for interest free loans for CNOOC to allow it to negotiate with tactical considerations. Hired by the Chinese government were many American financial advisors such as Goldman Sachs, J.P. Morgan, Akin Gump Strauss Hauer & Feld, Davis Polk & Wardell, and Morgan Stanley. The advisors were hired to help CNOOC and the Chinese government with its financial concerns and to put forward the best possible public image. On the other hand, the U.S. government was looking to protect its very valuable resources from foreign investors. The U.S. also had several entities involved, including The Foreign Investment Committee, U.S. Stock Exchange, and the Federal Reserve. One reason for the involvement of so many entities was because the deal was between 16 and 20 billion dollars.

The relationships of these parties were simple and complex at the same time. While some parties were in political opposition of each other, they also had a mutual interest in Unocal. The relationship between CNOOC and Chevron was one of a pure competition nature and it would come down to determining what Unocal’s choice would be most desired for a long term relationship.

One of the positions taken by CNOOC and Chevron as they vied for ownership of Unocal was an opening offer of a large sum of money. CNOOC initially offered Unocal $18.5 billion, and they were willing to increase it to $20 billion, as necessary. CNOOC sweetened the deal by promising Unocal and the U.S. that they would retain the current employees and pay