CNOOC offers Unocal bid sweetener

US politicians worry about putting strategic assets into Chinese hands

The board of Chinese oil firm CNOOC, which is competing with Chevron to acquire US oil and gas firm Unocal, has decided to sweeten its offer.

CNOOC is currently offering $18.6bn (�10.5bn) against Chevron's $16.3bn offer in what is being seen as a controversial sale of US energy assets.

The CNOOC board will put about $2.5bn in an account to be paid to Unocal shareholders if the deal falls through.

The sweetener comes amid fears the deal will be blocked on security grounds.

Fears that CNOOC will also raise its offer caused CNOOC Hong Kong shares to drop 2.5%.

Political fears

Some US politicians oppose CNOOC's bid on national security grounds as China is growing in military and economic power.

The Chinese firm has asked a key US panel to review the proposed merger.

It hopes a review by the Committee on Foreign Investments in the US - which considers acquisitions where US security could be a concern - will advance its cause.

At the end of June, the US House of Representatives voted to block the Bush administration from backing the deal.

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