Newspaper says CNOOC dropping Unocal bid, but CNOOC says offer still effective

HONG KONG (AP) - A Hong Kong newspaper reported Friday that CNOOC Ltd., China's third-largest oil producer, plans to scuttle its bid for Unocal Corp. as early as next week because political pressure from Washington has made the deal impossible, but CNOOC dismissed the report as speculation. 

The South China Morning Post quoted an unidentified source "familiar with the deal'' as saying: "There is literally no point to pursue this any further. The dirty Washington politics has basically killed the deal.'' 

But CNOOC spokesman Ray Bashford in Hong Kong said the front-page report in Hong Kong's biggest English-language daily was just speculation. 

"The offer is still effective, and we're still monitoring the situation,'' he added.Unocal - based in El Segundo, California _ first agreed to be acquired by Chevron in April for US$16.6 billion (euro13.7 billion) in cash and stock. 

But two months later, Hong Kong-based CNOOC - 70 percent owned by the Chinese government's China National Offshore Oil Corp. - offered US$18.5 billion (euro15.3 billion) in cash, or US$67 (euro55) a share, for Unocal. 

The bid sparked fears in the U.S. Congress that the proposed deal presented risks to America's economic and national security.  

A flurry of legislation intended to derail CNOOC's offer has been introduced in both houses of Congress. 

Last week, Chevron sweetened its offer for Unocal to US$17 billion (euro14.1 billion), and Unocal's board recommended that shareholders, scheduled to meet on Aug. 19, approve the deal. 

On Thursday, CNOOC denied media reports that it was increasing its Unocal bid, China's official Xinhua News Agency said, quoting an unidentified CNOOC spokesman. 

"So far, CNOOC's 67 US dollars per share all cash offer has not been changed and remains in effect,'' Xinhua quoted the spokesman as saying. 

"There are many guesses recently on whether CNOOC will sweeten its bid for Unocal. As for those guesses, the CNOOC won't make any remarks,'' Xinhua quoted the source as saying. - AP

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