Cnooc Ltd

CNOOC Ltd.'s offer to buy Unocal Corp. for $18.5 billion may stoke political fears in Washington, but whether the Chinese company's bid makes headway will depend on Unocal's directors and stockholders. The problem before them: Which is better, $67 or $62? But the board's decision probably will go beyond whether to simply take the highest price for El Segundo-based Unocal Corp., analysts said Thursday.

As Fu Chengyu sees it, the political maelstrom brewing in Washington over his Chinese oil company's bid to buy Unocal Corp. stems from a misunderstanding of global oil markets and the deep reforms that have taken place in China over the last two decades. The chief executive of CNOOC Ltd. said those opposing the $18.5-billion offer because of national security concerns might simply be "scared and surprised" by China's rapid rise in the world.

The proposed buyout of Unocal Corp. by China's CNOOC Ltd. is dramatizing the complex challenge of devising the rules for a capitalist competition with a communist nation. Much of the congressional opposition to the attempted acquisition has swirled around questions of whether the links between CNOOC and the Chinese government provide it unfair advantages and whether the company is acting as a commercial competitor or an arm of the Chinese state in pursuing the deal.

This week's bid by a leading Chinese oil company for Unocal Corp. is forcing U.S. policymakers to confront two sensitive issues: America's dependence on imported oil and its future relations with China, a rising economic and military power. CNOOC Ltd.'s unsolicited $18.5-billion bid for El Segundo-based Unocal has sparked a vigorous debate among policymakers and analysts about American access to energy supplies in an increasingly interdependent global economy.

Unocal Corp. was ready to brave a political fight and accept a buyout offer from China's CNOOC Ltd. last week, but instead endorsed rival suitor Chevron Corp. after CNOOC refused to sweeten its bid, Unocal said Monday. The showdown over Unocal unfolded over several days in mid-July, the El Segundo-based oil company said in a regulatory filing, revealing that its board favored the $18.

A Chinese company's gambit to drill for oil in U.S. territory demonstrates China's determination to lock up the raw materials it needs to sustain its rapid growth, wherever those resources lie. The state-owned China National Offshore Oil Corp., or CNOOC, reportedly is negotiating the purchase of leases owned by the Norwegian StatoilHydro in U.S. waters in the Gulf of Mexico, the source of about a quarter of U.S. crude oil production. China's push to enter U.S. turf comes four years after CNOOC's $18.5-billion bid to buy Unocal Corp.

Shares of China National Offshore Oil Corp. have taken a hit as the fallout from a pair of June oil spills continues to weigh heavily on the company's performance. By Tuesday's close in Hong Kong, the state-owned oil giant's stock was down more than 10% since the start of the week. The decline comes amid growing criticism about the handling of oil spills in China's northeastern Bohai Sea by CNOOC's partner, ConocoPhillips. The U.S. oil company operated two platforms in an offshore oil field named Penglai 19-3, where an estimated 3,200 barrels of crude oil and drilling fluids were released into the sea in early June.

Chevron Corp.'s bid to buy Unocal Corp. won endorsements from two more shareholder advisory companies Wednesday, a day after China's CNOOC Ltd. withdrew its higher offer for the El Segundo oil company. The reports from Glass Lewis & Co. and Proxy Governance Inc., which come a week before Unocal shareholders vote on the Chevron deal, conclude that Chevron was offering a fair price for Unocal. On Monday, the deal won the backing of Institutional Shareholder Services.

Unocal Corp.'s board of directors Tuesday recommended that its shareholders accept a last-minute, $17-billion takeover bid from Chevron Corp., rejecting a competing offer from China's third-largest oil company. Chevron boosted its offer by $2 a share shortly before the Unocal board met Tuesday night, raising its bid to $63 a share.

Chevron Corp. is in alliance talks with Chinese petroleum producers one year after beating out China's CNOOC Ltd. in a battle to acquire Unocal Corp. The San Ramon, Calif.-based company is in discussions with CNOOC, PetroChina Co. and China Petroleum & Chemical Corp., known as Sinopec, "to explore partnership opportunities, both inside and outside of China," said Steve Del Regno, managing director of Chevron's liquefied-natural-gas, or LNG, trading business in Asia.