CNOOC prepares to sweeten Unocal bid

CNOOC’s board of directors not only agreed unanimously to changes to its bid for US oil company Unocal on Wednesday night, it also gave management the right to raise its bid if it became necessary. The changes were made to make the deal more attractive to Unocal and also to reduce the risk that US regulators will stop the deal.

One measure that was adopted was the setting aside of $2 billion in an escrow account as compensation to Unocal in the event that the deal falls through. The decisions came as Unocal’s board of directors prepared to meet on Thursday to decide whether to pull their approval for Chevron’s bid for the California-based company in favor of the CNOOC bid. Meanwhile, at a hearing before the Armed Services Committee in Washington, critics of the CNOOC bid voiced concerns that China would gain political influence in every region of the world where Unocal operates if the Chinese company’s bid is successful.

James Woolsey, former director of the Central Intelligence Agency warned that the US could be headed for a confrontation with China, citing recent persecution of religious groups in China in his remarks. CNOOC, directors of the company, and its advisors on the bid for Unocal, JP Morgan and Goldman Sachs, all declined comment on the criticisms.