Unocal Deal about more than $$$

With the bidding war heating up for California energy gian Unocal, it is becoming clear that the end result won't be all about the money:

Most takeover battles can be settled by price - the highest bidder wins. But judging by the sharp reaction yesterday in Washington, that may not be the case with Unocal.

Just a day after the China National Offshore Oil Corporation, or CNOOC, one of China's largest state-controlled oil companies, made an unsolicited bid of $18.5 billion for Unocal, senators and representatives, as well as lawyers, bankers and lobbyists, are taking jabs at what may become one of the thorniest strategic business challenges facing the administration.

At issue is whether CNOOC can buy Unocal, which in April agreed to a $16.4 billion merger deal with Chevron, the American energy giant.

The unexpected foreign bid for Unocal comes at a time when oil prices are hitting $60 a barrel, energy reserves are gaining more value, and the United States is concerned about its own oil and gas resources. At the same time, the administration needs to work with China on trade and currency issues, even as concerns are increasing about the growing economic power of China.

"It does raise questions about how much of the country we are willing to sell to a Communist country that we might be fighting someday," said Michael O'Hanlon, an international military specialist at the Brookings Institution. But he added, "I'd be surprised if we really fall on our sword to prevent the sale."