Unocal Corp. would consider withdrawing its support of Chevron Corp.’s $16.5 billion bid to purchase the company if the Chinese Offshore Oil Corp. (CNOOC) met several conditions, including requests for divestments and other demands from U.S. regulators, several reports said Thursday.

CNOOC also may be willing to raise its bid for the El Segundo, CA-based company if its $18.5 billion bid fails to win the support of Unocal’s board of directors, according to the Washington Post. CNOOC Chairman Fu Chengyu told the Post that CNOOC would do what it takes to win the deal.

Meanwhile, President Bush, speaking from the Group of Eight summit in Gleneagles, Scotland, said Thursday that an official U.S. review of the proposed CNOOC bid should be completed without his involvement.

“There is a process that our government uses to analyze such purchases,” Bush told reporters. “It’s best I allow this process to move forward without comment.”

For the past two weeks, CNOOC and Unocal have been negotiating a deal to undercut Chevron’s $16.5 billion offer. Chevron has already received U.S. regulatory approval, and a vote is scheduled by Unocal shareholders in early August. Unocal also has indicated that its board continued to support the Chevron offer.

However, Reuters said an unidentified source reported that talks “are going well” between Unocal and CNOOC.

“Unocal is trying to strike a fine balance between the premium in the CNOOC offer and the regulatory uncertainty associated with the bid,” the source said. “They have to consider the two elements.”

Chevron has remained somewhat tight lipped about the overall negotiations. According to Chevron spokesman Don Campbell, “The terms of the Chevron-Unocal agreement clearly provide shareholders with superior value. Chevron’s agreement remains the only offer on the table.”

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