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Unocal tussle puts China oilman on global stage

Fu Chengyu may have failed in his bid to pull off China’s biggest and boldest foreign takeover, but the CNOOC chief has succeeded in putting a face on China Inc. and personifying Beijing’s global ambitions.
FU
Fu Chengyu Fu, who is married and has a daughter, held several posts in CNOOC and won a reputation as an energetic trouble-shooter before his elevation to the top job.Vincent Yu / AP file
/ Source: Reuters

Fu Chengyu may have failed in his bid to pull off China’s biggest and boldest foreign takeover, but the CNOOC chief has succeeded in putting a face on China Inc. and personifying Beijing’s global ambitions.

On Tuesday CNOOC Ltd., China’s third-largest oil group, walked away from a $18.5 billion takeover bid for oil firm Unocal Corp. due to overwhelming opposition from U.S. lawmakers, clearing the way for Chevron Corp.’s $17 billion offer.

While some observers have said CNOOC and Fu miscalculated the political challenges when they mounted their bid in June, others say the failed effort marks a key step along the learning curve as corporate China and its executives step onto the world stage.

“I think that Fu Chengyu should be praised for having the vision to push CNOOC and China to take this step, knowing that it would be hard but knowing that even if they lost, the lessons would be invaluable and could not be obtained in any other way,” said David Anderson, a former senior energy investment banker and now a U.S.-based consultant, before CNOOC pulled its bid.

By spearheading the bid, the veteran oilman who took the helm at CNOOC in late 2003 put himself in the global spotlight -- a rare place for a top executive in a country where corporate leaders tend to be anonymous career bureaucrats.

Fu, whose personal style is informal and open, nonetheless stopped short of mounting a full-fledged personal charm offensive to sell CNOOC’s bid.

Rather, he called the shots from his state-backed company’s Beijing headquarters, while Chief Financial Officer Yang Hua represented CNOOC in person in negotiations in New York.

Hands-on executive
The U.S.-educated Fu, whose heavily accented English is fluent, gave interviews to text media during the bidding process but not to TV.

While resistance from some quarters in the United States was expected, Fu expressed confidence early in the process that CNOOC’s bid would prevail.

“We really do believe this transaction will be a good offer for America,” he told Reuters in a June interview, hours after the company announced a bid that topped Chevron’s offer.

Fu was born in 1951 and studied in northeast China before going to work in China’s vast Daqing oil fields. He was trained as a geologist and petroleum engineer and has a master’s degree from the University of Southern California.

He was promoted to the top job at CNOOC after his predecessor, Wei Liucheng, was named governor of Hainan province.

While such moves between the corporate and government realms are frequent at the top echelons of China’s Communist party, Fu has remained in the oil industry for 30 years.

“Chairman Wei was more like a diplomatic figure, whereas Fu’s very much hands-on,” Merrill Lynch analyst Mario Traviati said shortly after CNOOC announced its bid.

Fu, who speaks more frequently with investors and the media than his predecessor did, served a stint as China vice president of Phillips Petroleum, now part of ConocoPhillips.

“You can ask Fu about anything -- about oil and gas, about his company, from the reservoir properties, from the rocks down to 2,000 meters -- pretty much all the way to the earnings per share,” said Traviati.

“He’s got enormous breadth of experience,” he added.

Since its listing, CNOOC has generally won high marks from analysts and investors for management quality and transparency -- especially when compared with other big state-run Chinese firms.

Smaller and leaner than rivals PetroChina and Sinopec , CNOOC has delivered healthy earnings and share price growth.

Fu, who is married and has a daughter, held several posts in CNOOC and won a reputation as an energetic trouble-shooter before his elevation to the top job.

He helped lead CNOOC’s initial public offering in 2001 after a listing attempt failed in 1999. In 2002, he oversaw the IPO of CNOOC’s sister firm, China Oilfield Services Ltd..

But even Fu’s trouble-shooting prowess was unable to overcome U.S. opposition to the Unocal deal.