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CNOOC Considers Unocal Bid

China National Offshore Oil Corp (CNOOC), the country's third largest oil producer, Tuesday said it was considering rivaling Chevron-Texaco's US$16-billion offer to acquire Unocal.

The Beijing-based oil company announced yesterday "it is continuing to examine its options with respect to Unocal," which include "a possible offer by the company for Unocal," based in El Segundo, California, according to a CNOOC statement on the Hong Kong stock exchange website yesterday.

"But no decision has been made in this respect," the statement said.

The bid by CNOOC, if successful, will be China's largest-ever overseas acquisition and facilitate the company - with a market value of US$22.6 billion - to drive its business growth by expanding overseas reserves including gas fields in Indonesia and Thailand.

The offshore oil firm needs to trump Chevron's April 4 agreement to acquire Unocal, which includes a US$500 million break-up fee if the transaction is cancelled and is set to be the biggest oil-industry deal since Phillips Petroleum Co's US$25 billion purchase of Conoco Inc in 2002.

"No assurances can be made that the company will ultimately make an offer for Unocal or, if any such offer is made, whether any agreement will be reached between the company and Unocal," CNOOC said.

The announcement was the first time that CNOOC made public its intention to acquire Unocal in response to recent market speculation and rumor.

Inside sources earlier said the Chinese oil firm would use its May 23-24 board meeting as a forum to discuss the possibility of swiping Unocal from Chevron-Texaco, after some board members vetoed the President Fu Chengyu's proposal to buy Unocal due to a relatively weak financial position.

A senior CNOOC official yesterday said there seemed to be no concrete conclusions coming out of the recent board meeting, as no pertinent corporate announcement had been made public.

(China Daily June 8, 2005)

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