CNOOC yesterday dropped its $18.5 billion (€15.1 billion) bid for Unocal, ending the most ambitious takeover attempt by a Chinese company and leaving Chevron to buy the US energy group for about $17.6 billion in cash and shares.

The end of CNOOC's eight-month quest casts doubt over the willingness and ability of Chinese companies to grow through foreign acquisitions in the face of potential political opposition and stiff competition from domestic rivals, especially in the US.

"This is certainly going to make Chinese companies take a longer look before they make the investment of time and money in trying to make a bid like this in the US," said Andy Rothman, China strategist with the brokerage CLSA in Shanghai.

"I don't think that's a positive thing for the US economy."

CNOOC's withdrawal means Unocal shareholders are virtually certain to vote for Chevron's offer of about $64 per share on August 10th.

The state-controlled Chinese group blamed the political backlash in Congress for the collapse of its bid, which failed to win the approval of Unocal's board because it was regarded as riskier than Chevron's lower offer. However, investors and analysts said CNOOC and its advisers made strategic mistakes.

"They probably should have put in a higher offer and put some conditions on disposal of the North American assets," commented an analyst with a US brokerage. - (Financial Times Service)