Fungible vs. strategic asset��what CNOOC tells us

Fungible vs. strategic asset--What CNOOC tells us. Whether oil and gas are fungible, or are strategic state assets, is an argument that came to a head during the failed CNOOC Ltd. takeover bid for Unocal Corp. Fungible argument believers saw CNOOC Ltd. as a big oil corporation simply trying to expand and make money. However, the state asset believers saw CNOOC Ltd. as a "front" company of the People's Republic of China (PRC) that is trying to secure strategic resources for Beijing.

This collision of ideologies also illustrates a changing trend, especially in Asia: Because of a jump in world hydrocarbon demand--notably India and China--as well as a perceived limit on resources, politics will play an increasingly strategic role in oil and gas, forcing fungible policies to fade.

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