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Cnooc Ltd. May Raise Unocal Bid

NEW YORK -- Cnooc Ltd., China's third-largest oil producer, may raise its $18.5 billion bid for Unocal Corp. by as much as 3 percent amid increasing opposition from U.S. lawmakers, people familiar with the plan said, according to

The Chinese state-controlled company may offer $19 billion in cash, or $69 a share, to counter Chevron Corp.'s cash and stock plan, said the people, who asked to not be identified. Chevron's agreement is worth $16.5 billion or $60.65 a share. Unocal's board met yesterday to consider Cnooc's bid.

Cnooc seeks the support of Unocal's board, which so far has stuck with its April 4 Chevron agreement. Chevron has declined to raise its offer in response to Cnooc's June 22 offer of $67 a share. The bid is superior because it would close quickly, while Cnooc faces a lengthy U.S. review, according to Chevron.

"The funds from Chevron are immediate, whereas from Cnooc it could be a year," said Rodney Mitchell, who oversees $395 million as president of the Mitchell Group, a Houston money manager. Chevron may prefer to sit tight, counting on government opposition to Cnooc, rather than "get into a bidding war with the Chinese government," said Mitchell.

Any agreement for Cnooc to acquire Unocal would be a "matter of national security" worthy of a serious investigation, said Senator Pete Domenici, a New Mexico Republican and chair of the Senate Energy Committee. "Now what's more important, some stockholders or national security?" Domenici said in an interview today.

Samuel Bodman, the U.S. Energy Secretary, yesterday declined to say whether President George W. Bush would support Cnooc if its bid for Unocal prevails.
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