As China's biggest offshore oil and gas producer may be poised to begin a bidding war, shares in the US oil firm Unocal have raised dramatically. Chinas National Offshore Oil Corporation (CNOOC) is in a dilemma as to whether it should make a cash offer of $20bn (£11bn) for Unocal, Bloomberg news agency reported. On the other hand, Unocal's shares have risen by 3% in the early trade from New York. Bloomberg reported that CNOOC was seeking approval for the offer from its eight-member board. This all happened last Tuesday.

It said that it didn’t wish to name people who were familiar with the plan. In fact as per the analysts, CNOOC would have to move quickly and quietly. The US Federal Trade Commission has already being given approval to ChevronTexaco. Hence, there are very few obstacles remaining. Analysts were of the opinion that Unocal's exposure to oil-thirsty Asian markets would make it a good fit. For example, CNOOC is the largest foreign offshore oil producer in Indonesia. CNOOC was expected to find a buyer for the parts of Unocal but it did not want to keep and announce back-to-back deals. Since that happened, oil prices have risen to nearly $60 a barrel, and the share prices of mid-range oil firms like Unocal have also gone up.

The US regulators have to pass on a CNOOC bid. Chances are that it could face antagonism from US lawmakers on politically delicate issues ranging from China's trade surplus to US oil security. A vote on a bid for Unocal in March was delayed by the firm's independent directors. According to Bloomberg, they were asking for more information. After the 1999 restructuring of China's oil industry, CNOOC, which is controlled by the state, was one of four big oil groups. It was provided with offshore exploration and production assets.  It had to work closely with foreign oil majors to improve its offshore technology. As a result of that, it has the Chinese oil sector's most professionalised management team. Apart from Shell, it shares ownership with Daiyu Bay. CNOOC trades in Hong Kong and also New York.