CNOOC's unsolicited offer of $18.5 billion for Unocal was the most ambitious foreign acquisition attempt yet by a Chinese company.

It set up a possible takeover battle with rival bidder Chevron Corp. while Beijing tries to secure foreign energy supplies for its booming economy, the world's second-biggest oil consumer.

"We have proactively made assurances to Unocal to address concerns relating to energy security and ownership of Unocal assets located in the United States," CNOOC Chairman and CEO Fu Chengyu said in a statement released in Beijing.

Fu said CNOOC was "fully prepared" to participate in a U.S. government security review.

He offered to discuss selling some Unocal pipeline and storage assets and putting assets that aren't involved in oil and gas exploration or production "under American management." He said Washington has approved similar arrangements in the past for foreign buyers of American companies.

U.S. Treasury Secretary John Snow said yesterday that he expects both parties to submit to a security review. Snow heads a federal panel that considers the possible security risks of foreign firms buying or investing in U.S. companies.

"It's not a business transaction at all," said C. Richard D'Amato, chairman of the U.S.-China Economic and Security Review Commission, a congressional advisory panel. "This is not a free market deal. This is the Chinese government acquiring energy resources."

The Chinese government, which owns 70 percent of CNOOC, has made deals with countries ranging from Sudan to Venezuela to secure foreign oil and gas supplies.

"Substantially all of the oil and gas produced by Unocal in the U.S. will continue to be sold in the U.S.," Fu's statement said. "The development of properties in the Gulf of Mexico will provide further supplies of oil and gas for American markets."

However, his statement noted that 70 percent of Unocal's oil and gas reserves are in Asia, and didn't say what would happen to those resources.

Many oil industry experts agreed that security fears were unwarranted and warned that such responses could make it harder for U.S. oil giants to gain the international access they need to grow.

"This is not a company building military aircraft or missile technology. This is energy, at the end of the day," said Lawrence Goldstein, president of the nonprofit Petroleum Industry Research Foundation in New York.

El Segundo, Calif-based Unocal already had accepted an offer to be bought by Chevron for nearly $16.6 billion in cash and stock. Chevron said it will not sweeten its offer — at least for now.

"We're satisfied with the bid we have on the table," Peter Robertson, Chevron vice chairman, said in an interview on CNBC. "We think it's still the best opportunity for the shareholders."

Unocal said its board would consider the hostile takeover bid. The company said late yesterday that Chevron had given it clearance to begin talks with CNOOC about a possible deal.