BEIJING — China's third-largest oil producer made an unsolicited $18.5 billion bid Thursday for U.S. oil company Unocal Corp., marking the communist nation's most ambitious attempt yet to acquire a Western corporation and setting up a possible showdown with American politicians over national security issues.
The purchase by state-owned CNOOC Ltd., if completed, would be the biggest yet in a multibillion-dollar wave of foreign acquisitions by Chinese companies trying to secure a place as global competitors.
It comes amid a flurry of foreign oil and gas deals by China as its government, facing stagnant production at home, tries to secure energy abroad for its booming economy, already the world's third-biggest oil importer behind Japan and the United States.
The offer sets the stage for a possible takeover battle with Chevron Corp., reflecting China's new willingness to adopt Wall Street's more aggressive tactics. Chevron had offered to buy Unocal for a lower price of $16.6 billion — a proposal that Unocal's board already had accepted. Until recently, hostile takeovers by Chinese companies abroad were almost unheard of.
El Segundo, Calif.-based Unocal, the ninth-biggest U.S. oil company, said it would evaluate the CNOOC offer, but that its board's recommendation to shareholders to accept the Chevron offer remained in place.
Chevron remained confident that its bid would prevail. Vice Chairman Peter Robertson told CNBC television that the Chevron bid is "very competitive" and that he believes Unocal shareholders will approve the Chevron offer relatively soon.
"We think it is the best-value proposition on the table. We think we're going to prevail at the level we're at," Robertson said.
Chevron, based in San Ramon, Calif., offered in April to acquire Unocal in a deal that would give Unocal shareholders a choice of $65 per share in cash, Chevron stock or a mix of stock and cash.
A deal with CNOOC, if it were to go forward, would almost certainly meet obstacles in Washington. Even before CNOOC made its offer, two members of Congress appealed to President Bush last week to review it for possible security threats. They warned of China's "pursuit of world energy resources."
Robertson told CNBC that a Chevron deal would put more oil and gas into the commercial market.
"Americans are worried about the supply of oil and gas. There is an issue here of who can put more oil and gas into the market on a commercial basis. I think if the Chinese government buys this asset, you can be sure that much of these materials will go to China," Robertson said.
In Washington, Sen. Ron Wyden, D-Ore., told a Senate Finance Committee hearing on China's currency system that a review by a federal panel for national security considerations would be imperative.
Treasury Secretary John Snow, who heads the Committee on Foreign Investment in the United States, responded: "I would fully contemplate that the parties . . . would want to avail themselves of that process," adding that it remained hypothetical.
CNOOC chairman and CEO Fu Chengyu insisted Thursday that national security wasn't an issue, calling it a friendly bid and saying it would be superior for Unocal shareholders.
"This transaction is purely a commercial transaction," he said in a conference call with reporters. "We are confident that the U.S. government will support this project."
The federal panel that considers security risks of foreign firms buying or investing in U.S. companies in March cleared Chinese computer maker Lenovo's $1.75 billion purchase of IBM's personal computer division, which created the world's third-largest PC maker. Several U.S. lawmakers asked for the review.
The panel meets in secret and includes representatives from the departments of Treasury, Defense, Justice, Commerce, State and Homeland Security. The committee makes recommendations directly to the president, who can block sales for national security reasons.
George H.W. Bush is the only president ever to block such a deal, stopping the sale of a Seattle aircraft parts manufacturer to China in February 1990.
Elsewhere, China has forged oil and gas deals in countries ranging from Sudan to Kazakhstan to Venezuela. Beijing is competing with Tokyo for access to Russian oil from a planned Siberian pipeline.
China used to meet its own needs from domestic oil fields but became a net importer in the 1990s and now is one of the world's biggest consumers, along with the United States and Japan.
The bid for Unocal is "a case of the Chinese trying to secure supply for their own purposes," said Daniel Hynes of ANZ Bank in Melbourne, Australia. "With their oil needs growing exponentially, securing this asset would put them in very good stead for the future."
CNOOC's offer is the biggest Chinese attempt at an unsolicited takeover of an American company — but not the first.
Appliance maker Haier Group and two U.S. private equity firms offered $1.28 billion for Maytag after the American company agreed to be bought by another U.S. firm. Maytag says it is considering the Haier consortium's offer.
Troubled British automaker MG Rover courted a Chinese firm as a possible corporate savior, trying to sell itself to state-owned Shanghai Automotive Industries Corp. But the Chinese partner decided against a deal and Rover collapsed.
CNOOC said its deal with Unocal would more than double its production and increase reserves by nearly 80 percent. The company estimated that 85 percent of the combined reserves of both companies are located in Asia and the Caspian Sea region.
CNOOC's chief financial officer, Yang Hua, told Dow Jones Newswires that his company is "prepared to closely cooperate . . . to get U.S. approval for this deal." The company plans to retain "substantially all employees, including those in the U.S," noting that Chevron, in contrast, plans layoffs, he said.