Thayer Consultancy Background Brief:

ABN # 65 648 097 123

U.S. Blacklists China National
Offshore Oil Company
Carlyle A. Thayer
December 5, 2020

We are preparing a report on the U.S. government's blacklisting of the China National
Offshore Oil Corp (CNOOC) and seek your analytic input.
The Trump administration on Thursday (3 December) added China’s oil giant CNOOC
to a blacklist of alleged Chinese military companies. CNOOC is said to have played a
direct role in asserting China’s claims in the South China Sea, most prominently by
operating the Hai Yang Shi You 981 movable oil rig that kickstarted a standoff between
Vietnam and China in 2014.
What is your assessment? What does he Trump Administration’s move mean for the
South China Sea issue? Why did the Trump Administration make this move at this
time?
ANSWER: There are several reasons why the U.S. Department of Defence placed the
China National Offshore Oil Company (CNOOC) and three other Chinese companies on
its list of “Communist Chinese Military Companies” on 3rd December. First, the
Department of Defense is complying with a 1999 Law requiring it to create a catalogue
of Chinese companies owned or controlled by China’s Ministry of Defense or the
People’s Liberation Army. The listing will not take effect until it is published in the
Federal Register.
Second, blacklisting CNOOC is the most recent action the United States has taken to
level the playing field between American companies who are compliant with U.S. rules
and Chinese companies who flout the rules in accessing the American market. The
blacklist aims to limit the ability of Chinese companies with military connections
operating in the United States from gaining access to emerging dual use (civilian-
military) technologies.
There are already 35 Chinese companies on the list from aerospace, chemical,
construction, energy technology, and telecommunications sectors. CNOOC is the first
oil and gas company on the black list.
There are media reports that the Trump Administration will prohibit an additional 89
Chinese companies with military connections from purchasing a range of U.S. goods
and technology before it leaves office.
Third, this year the Trump Administration, especially Secretary of State Mike Pompeo,
has stepped up and expanded the scope of its anti-China rhetoric and actions. This
 2

process is intensifying in the final days of Trump’s lame-duck presidency in order to

show that President Trump stands up for American interests against a predatory
China.
Fourth, U.S. media reports that Trump is trying to lock incoming President-elect Joe
Biden into an anti-China stance. In other words, it is a pre-emptive move to prevent
President Biden from softening U.S. restrictions on China.
The U.S. Department of Defense blacklist follows an Executive Order issued by
President Trump that prohibits American investors from buying securities in
blacklisted companies from November 20201.
The blacklisting of CNOOC will have little impact on its offshore oil operations,
including the South China Sea. Very few U.S. investors have purchased CNOOC
securities.

Suggested citation: Carlyle A. Thayer, “U.S. Blacklists China National Offshore Oil
Company,” Thayer Consultancy Background Brief, December 5, 2020. All background
briefs are posted on Scribd.com (search for Thayer). To remove yourself from the
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.