A senior Kuwaiti oil official assured Congress yesterday that Kuwait's $2.5 billion takeover of Santa Fe International Corp. would not interject OPEC politics or Arab influence into U.S. oil operations and would not increase U.S. vulnerability to an oil embargo.
Abdulrazzak Mohammed Hussain, vice chairman and managing director of Kuwait Petroleum Corp., told a House subcommittee that Santa Fe, a major oil exploration and oil industry construction firm, "will continue to be run as a business enterprise, subject, as an American company, to the political and economic policies of the U.S. government."
Santa Fe has agreed to be acquired by Kuwait Petroleum, and is scheduled to become a wholly owned subsidiary of the state-owned Kuwaiti organization if Santa Fe stockholders approve the transaction at a Dec. 1 meeting. Rep. Benjamin Rosenthal (D-N.Y.), chairman of the House Commerce subcommitte, has questioned the implications of the deal for the United States and the legality of some aspects of the takeover.
Asked whether Santa Fe's modest crude-oil production could be affected by policies of the Organization of Petroleum Exporting Countries, Hussain said, "The answer is emphatically no. Santa Fe is involved in crude oil production in only two countries--the U.S. and the United Kingdom. None of this crude oil could be subjected to OPEC pricing or to any kind of external restriction on availability."
He acknowldged that Santa Fe will be controlled by the Kuwaiti government, but he said its drilling and construction operations always would be regulated by the laws of whatever country they are involved in.
He said that Kuwait does not sell any of its oil to the United States anyway, so the embargo issue does not arise. James R. Ukropina, senior vice president of Santa Fe, said that "nothing in this transaction is predatory or unfriendly to either the shareholders or the country. The price is fair, the outlook for Santa Fe positive, the benefit to the country considerable and, on that basis, the favorable recommendation of the Santa Fe board of directors was unanimous."
Directly or through subsidiaries, Santa Fe is involved in finding, extracting and transporting oil in several countries, building power plants and refineries, developing synthetic fuels and designing and constructing power plants, including nuclear plants in the United States.
"We're transferring a company that has the expertise to build nuclear plants, has drilling technology and resources to a foreign company that took part in the 1973 oil embargo," Rosenthal complained. As a foreign-owned corporation, Santa Fe would not even pay U.S. income tax, he said.
The scope of the company's operations in the United States led Rosenthal to raise several questions that were not resolved fully at the hearing:
Would Santa Fe, as a participant in a consortium developing synthetic fuels, receive federal synfuels subsidies? "It might be inappropriate for the U.S. government to subsidize the Kuwait government," Rosenthal said.
What would Santa Fe's American executives and workers do if directed by their superiors in Kuwait to take actions contrary to the interests of the United States or its allies?
Is a Kuwaiti-owned corporation authorized to retain its drilling and exploration rights on federally owned land if Kuwait is not on the Interior Department's list of countries with which the United States has reciprocal agreements?