Chevron favored in Unocal bid

ChevronTexaco has emerged as the favorite in the international tug-of-war over California energy giant Unocal.

Oil giant Chevron Corp., facing a strong challenge from a Chinese rival, increased its bid to buy Unocal Corp. on Tuesday night and quickly won the approval of Unocal's board, a decision that brings the two American companies closer to a merger.

San Ramon's Chevron, which had been vying with China National Offshore Oil Corp. to buy Unocal, increased its bid to $17 billion, up from roughly $16. 5 billion. Unocal's board accepted the deal Tuesday night and recommended that the company's shareholders approve it at a special meeting on Aug. 10.

Chevron's increased bid still doesn't match China National's $18.5 billion offer. But the foreign firm, which is 70 percent owned by the Chinese government, has encountered fierce opposition in Washington, with politicians calling its bid a threat to national security.

Chevron, in contrast, already had the approval of federal regulators for its earlier bid. The offer of more cash by Chevron appears to have won over Unocal's board, which agreed to Chevron's original offer this spring but had been considering switching to CNOOC.