CNOOC, the mainland's third-largest oil company, has confirmed its intention to take over Unocal Corp of the United States, but analysts give the bid poor odds for success. CNOOC said yesterday it was examining its options on Unocal, the ninth-largest petroleum firm in the US, including a possible acquisition offer. 'These options include a possible offer by the company for Unocal, but no decision has been made in this respect,' China's dominant offshore oil and gas producer said in a statement. Whatever strategy it chooses, it will need to compete for Unocal with Chevron Corp - the world's fifth-largest oil company, which submitted a US$16.4 billion cash-and-new shares offer to Unocal shareholders in April. Chevron's offer has already been approved by Unocal's directors. CNOOC would need to top that offer and pay a US$500 million 'break-up' fee to Chevron to acquire Unocal, which some analysts describe as too large for the mainland firm to swallow. CNOOC had cash and deposits of only US$2.75 billion at the end of last year. Analysts said the company could come up with enough capital to muster an acquisition, but there were bound to be political objections in the US, and CNOOC's rationale for the acquisition might not stand up in the long term. 'If they do place a bid, the main concern is not debt gearing. The key question is whether CNOOC will overpay for Unocal, and that depends on the oil price in the next 20 years,' said Standard & Poor's director of research Lorraine Tan. Chevron has offered about US$9.35 a barrel for Unocal's 1.75 billion barrels of oil equivalent in oil and gas reserves as at the end of last year. '[This] is not cheap - about 30 per cent higher than CNOOC's market capitalisation per barrel of US$7.35,' wrote Daiwa Securities associate director of research Rachel Tsang Wai-ming in a note. CNOOC had reportedly withdrawn an earlier bid for Unocal after its board failed to agree on the merits of an acquisition. Ms Tsang also warned against underestimating the opposition from US politicians that would emerge if they saw strategic US assets falling into the hands of a Chinese state-owned company. 'It would be very controversial ... and would definitely be followed by huge opposition if it happens,' Ms Tsang said. CNOOC's interest in Unocal reflects China's urgent interest to secure foreign oil and gas reserves. 'Chinese oil companies appear to have a stronger risk appetite than their western counterparts as they have a more entrenched need for energy and a huge downstream market,' Ms Tan said. 'One would hope that it is not the case that CNOOC needs to make this acquisition because there isn't any sizeable asset to buy elsewhere ... sometimes it's a matter of patience.'