Chinese oil firm drops Unocal bid

China's state-owned oil company, CNOOC, today withdrew its $18.5bn (£10.4bn) takeover bid for the US oil and gas producer Unocal.

CNOOC said its decision followed strong political opposition in the US.

"CNOOC has given active consideration to further improving the terms of its offer, and would have done so but for the political environment in the US," the company said in a statement.

CNOOC made its all-cash offer on June 22, topping a cash-and-stock offer from Chevron, America's second-largest oil firm. But the move immediately sparked opposition in Congress, where politicians said the deal posed threats to US economic and national security.

A flurry of legislation intended to derail CNOOC's offer has been introduced in both houses of Congress. CNOOC's parent company, the China National Offshore Oil Corporation, is 70% owned by the Chinese government.

CNOOC's withdrawal frees the way for Chevron to clinch its $17.4bn bid for Unocal.

The Chinese company said its bid had been based on purely commercial objectives, and it had been prepared to address any legitimate concerns US officials may have had over the acquisition.

CNOOC called the political response to its offer "regrettable and unjustified" and said the political environment created "a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction".

This is the second setback in quick succession for Chinese firms seeking acquisitions in the US. Last month, the Chinese appliance maker Haier withdrew its $1.28bn offer for Maytag, owner of the Hoover brand of vacuum cleaners.

Haier pulled out after Michigan-based Whirlpool launched a cash and shares bid valuing Maytag at about $1.37bn.

One successful bid by a Chinese company has been the acquisition of the IBM personal computer business by Lenovo.