Markey Praises CIFIUS Review of CNOOC-Nexen Deal

Lawmaker Raised Gulf of Mexico Lease Holding Issue in July; Markey Released Report Showing Vast Holdings of Free Drilling Leases by Foreign Governments

WASHINGTON (November 28, 2012) – According to the Canadian oil company Nexen, the deal for a planned takeover by the Chinese state-owned oil giant CNOOC has been resubmitted for review by the U.S. government due to lease holdings and operations in the Gulf of Mexico that could be transferred to China. Rep. Ed Markey (D-Mass.) first raised the fact that the takeover could result in China drilling for free on U.S. soil, depriving taxpayers of millions of dollars in royalties for taxpayer-owned oil in July, asking Treasury Secretary Tim Geithner to have his Committee on Foreign Investment in the United States (CIFIUS) review the deal as it has the authority to review foreign investments in the United States if it has ramifications for American 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 full or partial ownership in five 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 Treasury Department is correct to review this deal, as it could result in a massive transfer of wealth from American taxpayers to the Chinese government,” said Rep. Markey, the top Democrat on the Natural Resources Committee. “Either these leases need to be fixed so taxpayers are paid royalties, or they need to be taken out of this deal.”

Rep. Markey also released a report in September that showed there are nearly 150 active deepwater drilling leases in the Gulf of Mexico on which companies do not pay any royalties to the U.S. taxpayer. Rep. Markey asked Department of Interior Secretary Ken Salazar to use his authority to block the deal if these leases were not renegotiated.

“These free-drilling leases in the Gulf of Mexico related to the Nexen-CNOOC deal are just the beginning of a much larger problem that needs to be fixed,” said Rep. Markey. “American taxpayers stand to lose tens of billions of dollars in royalties from taxpayer-owned land. When every penny counts during these trying times for our nation’s finances, foreign oil companies and governments shouldn’t be drilling for free in American waters.”