US politicians were concerned about CNOOC's motives

Had China's state-owned CNOOC raised its $67 a share bid by enough they would have had a deal, said Unocal.

The two firms "substantially completed" a draft merger document in mid-July.

But in the absence of a new offer, Unocal recommended shareholders to back a $63 a share offer from Chevron. The bidding process has been controversial.

Unocal's chief executive Charles Williamson said he urged CNOOC chief Fu Chengyu to make his best offer.

Political concerns

But CNOOC refused to put forward a new offer, unless Unocal paid the costs of ending the Chevron deal and lobbied for the deal in Congress.

Any purchase by CNOOC would have had to be examined by President George W Bush's administration, a process that could have taken months.

Political concerns centred both on America's $160bn trade deficit with China, whose economy is surging ahead, and Beijing's emerging political and military power.

To compensate for the risk of delays in seeking regulatory approval, Unocal insisted CNOOC raise its offer, despite the fact that it already trumped Chevron's.

Meanwhile, CNOOC had made repeated efforts to reassure politicians that its takeover would not jeopardise jobs or become a security risk.

But despite the concerns of both parties nearly being ironed out, no increased bid was put forward by CNOOC.