Report: CNOOC to be Added to U.S. Investment Blacklist

File image courtesy CNOOC

Published Nov 29, 2020 10:43 PM by The Maritime Executive

The Trump administration has plans to add China National Offshore Oil Corporation (CNOOC) to its list of firms that are off-limits for American investors due to ties to the Chinese military, according to Reuters. 

The company is the third-biggest state owned oil firm in China, and it has engaged in offshore oil exploration activity in contested parts of the South China Sea - notably within Vietnamese claim areas. In 2014-15, CNOOC deployed the rig Haiyang Shiyou 981 to a field in Vietnamese waters and initiated exploration drilling, despite vehement objections from the government of Vietnam. After a skirmish between Vietnamese vessels and Chinese support ships, Beijing entered into talks with Hanoi, and the rig was withdrawn. At the time, CNOOC chairman Wang Xilin said that the activity was "within an area legally authorized by Beijing, and we believe it is not under territorial dispute."

The administration's action will place CNOOC on a list of designated “Communist Chinese Military Companies” in which Americans may not hold stock. Two state-owned semiconductor firms will also be added to the list, according to Reuters. 

In mid-November, the Trump administration issued an investment ban for an initial tranche of 31 Chinese firms with military ties. The order gives American entities with publicly-traded shares in the named firms until November 2021 to divest their holdings. The action was issued as a declaration of national emergency, and it describes China's military-industrial complex as an "unusual and extraordinary threat . . . to the national security, foreign policy, and economy of the United States." It is limited to shareholding and does not prohibit American entities from engaging in other forms of business transactions with the named firms. 

The initial list includes several prominent names in the maritime world - China State Shipbuilding Corporation (CSSC), the world's largest commercial shipbuilder and China's primary naval shipbuilder, and China Communications Construction Corporation (CCCC), the world's largest port construction and dredging company. CCCC had a large role in building China's forward bases in the Spratly Islands and Paracel Islands, and it is one of the most prominent firms in the "Belt and Road" overseas infrastructure investment program.