The current debate among US lawmakers about Dubai Port World’s (DPW) proposed takeover of terminal operations at six US ports may seem far from the oil industry.
In fact, that debate chimes in with pressure last year from the US Congress that forced CNOOC Ltd., China’s largest offshore oil producer, out of the running for Unocal Corp., which was eventually taken over by Chevron Corp.
Then it was argued that oil and natural gas are strategic assets critical to US national security; hence, Unocal ought not to be in foreign hands. Few in the debate seemed to know or care that more than half of Unocal’s oil and gas production came from seven countries outside North America.
Now the debate is over the ability of DPW to provide adequate security for the six terminals it would operate in the US.
Ignorance reigns
The administration of George W. Bush approved the deal in January after a 30-day review, and DPW, owned by the Dubai government, agreed to a further 45-day investigation of the transaction due to congressional criticism.
In particular, lawmakers object because Dubai is one of seven sheikdoms that make up the United Arab Emirates, where two of the Sept. 11, 2001, attackers came from and whose banks were used by the plotters to funnel money to the operation.
As a result, some US lawmakers-Democrats and Republicans alike-want to scotch the deal altogether.
Sen. Susan Collins, a Maine Republican who heads the Senate Homeland Security Committee, said a proposal requiring DPW to subcontract the operations to US firms “is worth pursuing and has merit.”
Sen. Charles Schumer, a New York Democrat, said he would simply ban DPW from owning the facilities. “It should be a total spin-off, a selling of the US operations,” said Schumer.
Farfetched scenarios
But let’s consider where such a ban would lead to since overseas-based companies operate up to 80% of the terminals at US ports. Does the proposed ban on DPW mean that US lawmakers will suddenly ask those other terminal operators to cease business and close up shop?
Does it mean that the lawmakers will suddenly begin eyeing oil and gas facilities in the US owned by foreigners? How about the security implications of Citgo Petroleum Corp., owned by the government of Venezuelan President Hugo Chavez?
Is someone in Washington, DC, going to suggest that Citgo represents a security risk and ask that its US facilities-a receiving terminal, refineries, and retail outlets-be turned over to US firms?
How far will this sort of thinking extend? If lawmakers are serious, they ought to consider the security implications of US waterborne tanker imports, which rose by 48% during 1994-2003, while domestic tanker shipments declined by 21%.
Perhaps it’s time to take over those foreign fleets, too, or at least stop them from carrying oil to US ports. ✦