Dear Senator Earl Grey: Thank you very much for bringing this deal to my attention.

I can understand how Oxys sale in Argentina might worry our constituents, but respectfully I must disagree with your view that the move is unpatriotic. From my understanding, the real issue is not that the U.S. is forgoing oil imports from Argentina as a result of the deal (it isnt). Instead, slowly but surely, U.S. (and European) companies are offloading their Latin American assets to Chinese interestssomething good for profits but not necessarily positive for our influence in the region. I invite you to click on the links in the text below to read external support for my arguments from respected sources. Although it may seem at first glance that Sinopec is taking U.S.-destined oil hostage with this purchase, much of Occidentals production in Argentina is destined for domestic sale. According to the Energy Information Agency, Argentina has not even figured among the top 15 oil exporters to the United States in the past two years. Furthermore, Argentine export restrictions on oil production and exploration are reviled throughout the industry, and one such politically-motivated provision in 2007 aimed at RepsolYPF mandated that internal oil demand must be satisfied by domestic production (at inflexible, anticompetitive prices no less) before oil can be exported. The only way for China to receive the actual output from this investment is through a change in the law or oil swaps with local refiners that have operations abroad. When we were discussing Cristina Fernandezs government early last year, you may remember the article from the New York Times I sent you about her countrys oil production situation. One thing to be very aware of with Argentina is the tendency the country has to politicize natural resources and threaten foreign firms when times are tight. Argentinas record over the past several years is nothing short of pathetic, given the nationalization of the countrys private pension system and flag carrier airline. Add this to the constant threats of export taxes on the commodities that are driving growth in the first place and it is no wonder that Western companies are fleeing the scene. I cannot imagine that things will get any better now that the presidents popular husband (and previously potential successor) Nestor Kirchner has died, compounded by the national budget being squeezed by a hostile Congress and payments coming due from the renegotiation of their 2001 debt default. Both the Wall Street Journal and Argentinas leading daily Clarin, assert that, along with BPs sale to CNOOC of its part of a joint venture in Pan American Energy, Western oil companies are looking to offload mature oilfields and are hungry for the cash that can fund more profitable exploration elsewhere. Oxys sale, if anything, is recognition of this unstable environment and Argentinas restrictions on new offshore and onshore exploration by foreign companies. The Chinese analyst interviewed in the piece you sent is optimistic about the absence of major competition in markets like Argentina. But there is a reason why this competition is lackingvolatile regulatory policies, falling production, and the real threat of further power grabs under the Fernandez government. For strategic reasons, of course the U.S. needs to keep a close watch on Chinas growing natural resources acquisitions in Latin America. Nevertheless, Argentina has proven time and time again to be hostile to foreign investment in the energy sector, and the Chinese may soon learn the harsh realities of doing business there. If Oxy can offload production capability that is not destined to the U.S. market anyway and give good returns to shareholders, I think this can only be a good thing for our economy. All the best, James Stranko P.S. Given the $2.5bn cash injection, might this not be a good time to give Spencer Abraham a call to gauge his support in the run-up to 2012?

Sources: Repsol Investor Disclosure: Operational Risk Factors (Significant presence in Argentina) http://www.repsol.com/es_en/corporacion/accionistas-einversores/inf_general_acerca_de_la_sociedad/factores_de_riesgo/factores-riesgo-relativooperaciones.aspx Wall Street Journal: Sinopec Buys Occidental Unit for $2.45 Billion, 12 Dec 2010 http://online.wsj.com/article/SB10001424052748703766704576010280953337542.html New York Times Dispute Shows Argentinas Lack of Oil Exploration, 25 Feb 2010 http://www.nytimes.com/2010/02/26/world/americas/26argentina.html Americas Quarterly Argentinas Proposal to Pay Off its Debt, 23 Nov 2010 http://www.americasquarterly.org/node/2006 Clarin (in Spanish) Otro avance chino: compran la cuarta productora local de petrleo, 11 Dec 2010 http://www.clarin.com/politica/avance-compran-cuarta-productora-petroleo_0_388161316.html