A strategic planner for an international oil and gas firm, Ed Chen was tasked with reviewing China's petroleum refining industry to seek out potential investment opportunities. Globally, demand for transportation fuel was on the rise and government clean fuel standards were becoming strict. As refineries struggled to adapt to tightening product quality requirements, those able to efficiently produce a high proportion of light products from heavy and sulfurous crude oil prospered the most. World refining capacity was expected to substantially increase over the next few years, with China contributing much of the growth. Building a refinery was an expensive task anywhere, though construction cost estimates were much lower for Asia. Ed questioned whether there was room for foreign competition or if it was a locals-only game.

Shareholders of Unocal, a mid-sized American oil and gas firm, had watched the value of their stock rise ever since rumors of a takeover surfaced early in 2005. Trading in the low US$40s at the beginning of the year, competing firms outbid each other, taking Unocal's per share price above US$60 by mid-summer. International oil companies, flush with cash due to high oil prices and facing low reserve replacement rates, increasingly sought to acquire strategic assets. Unocal's significant natural gas reserves in Asia, combined with its expertise in deep water drilling, made it a particularly attractive target for CNOOC, China's state-controlled offshore oil company. Though CNOOC trumped earlier offers with a US$67 per share, all-cash deal, valued at US$18.5 billion, the firm encountered stiff opposition from Washington and Wall Street.