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UNOCAL: A COMPANY WIT



Subject: UNOCAL: A COMPANY               WITHOUT A COUNTRY? 



                UNOCAL: A COMPANY
              WITHOUT A COUNTRY? 

        The oil and gas company says it won't
                   leave Burma, but it may
                         de-Americanize 

       The U.S. is becoming a distinctly inhospitable place for Unocal Corp.
to hang its
       hat. In March, a federal district court judge in California ruled
that the oil and
       natural-gas company could face trial in the U.S. for human-rights
violations in
       Burma, where it has a $340 million stake in a natural gas project.
Then, on Apr.
       22, the Clinton Administration imposed sanctions against the rogue
state that
       prohibit further investment by U.S. companies.

       Faced with this political pressure
       at home and drawn by the lure of growth opportunities abroad, the
$5.3 billion
       company is taking a radical step: It is de-Americanizing. Legally,
the company is
       headquartered in El Segundo, Calif. But in company literature, Unocal
says it ''no
       longer considers itself as a U.S. company'' but a ''global energy
company.'' In
       practice, it is slowly moving assets, research spending, and
management to Asia.

       On Apr. 21, Unocal opened what it calls a '''twin corporate
headquarters'' in
       Malaysia. President John F. Imle Jr. and several senior executives
will be posted
       there while CEO Roger C. Beach remains in California. This after it
sold off its
       U.S. refining operations and gas stations to Tosco Corp. in March for
$2 billion.
       Analysts say Unocal may decide to spin off its Asia headquarters into
an entirely
       separate company--and in so doing, may be able to bypass U.S. sanctions.
       ''They have structured their operations now so it would be easy for
them to pull
       out of the U.S. if that's what they needed to do,'' says Jennifer
Weinstein,
       research associate at NatWest Securities Corp.

       Unocal says it has no immediate plans to relocate or spin off the
international
       division. Its Burmese operations, the company says, are grandfathered
under the
       sanctions, and 62% of Unocal's revenue is still generated in the
U.S., mostly from
       production in the Gulf of Mexico and Alaska. But two-thirds of its
$1.34 billion in
       capital spending currently goes to Asia--Central Asia, Bangladesh,
China, and
       elsewhere in Southeast Asia--as well as Burma. ''Our major focus area
for future
       investment is Asia,'' Beach wrote in a recent letter to shareholders.
In Burma,
       Unocal owns 28% of a joint venture with France's Total, the Petroleum
Authority
       of Thailand, and Myanma Oil & Gas Enterprise, a state-owned company. The
       four are investing $1.2 billion to develop a natural-gas field in the
Andaman Sea
       south of Rangoon and a 254-mile pipeline to Thailand set to open in
mid-1998. A
       proposed second pipeline, to Rangoon, could be halted by U.S. sanctions.

       Unocal isn't the only U.S. company operating in Burma. Texaco Inc.
and Arco
       Corp. have invested in smaller natural-gas projects. But pressure is
mounting
       against multinationals that deal with the State Law & Order
Restoration Council
       (SLORC), the military junta that has run the country since forcibly
taking power
       in 1988. PepsiCo, Philips Electronics, and Motorola, among other U.S. and
       European companies, have pulled out of Burma in the last year. That
leaves
       Unocal the biggest U.S. player in the country by far--and, so, a
magnet for
       activists.

       RUNAWAYS. The anti-SLORC campaign may only drive Unocal closer to
       divorcing itself from the U.S. Overnight, it could join a growing
community that
       includes Hongkong & Shanghai Banking Corp., which moved to Britain in
1993
       ahead of China's takeover of Hong Kong, and ABB Asea Brown Boveri Ltd.,
       which now calls itself a ''multidomestic corporation.''

       Other multinationals will be watching. The human-rights case appears
tenuous:
       Total is building and running the Burma operation, while Unocal is
just an
       investor. But if the trial is heard in the U.S., it could have broad
implications for
       other U.S. companies operating abroad. ''It should be a warning that
companies
       should be aware of what any of their government partners are doing,''
says
       Robert W. Benson, professor of international human-rights law at
Loyola Law
       School in Los Angeles. Or they should start thinking about a new home.

       By Sheri Prasso in New York, with Larry Armstrong in Los Angeles