Cnooc is preparing a higher bid for Unocal to persuade the American company’s board to dump support for a rival offer from Chevron, the Financial Times and Wall Street Journal said.

Chinese state-controlled Cnooc may raise its $18.5 billion cash offer and pay more than $2.5 billion into an escrow account to soothe concern among Unocal directors that the American government may block the bid, the Wall Street Journal said, citing unidentified people familiar with the situation. Chevron’s cash-and-stock plan was worth $16.5 billion yesterday.

Growing opposition among American politicians to any Chinese acquisition of El Segundo, Calif.-based Unocal, has helped Chevron, the second biggest American oil company. Chevron has said its offer is superior because it will be completed quickly.

Cnooc “will not be outbid, but they may not win,” said David Merjan of William Blair & Company in Chicago. William Blair was the second-biggest holder of Cnooc shares after the Chinese government as of March 31.

Rep. Duncan Hunter, a California Republican who chairs the House Armed Services Committee, said yesterday that he would consider legislation to block a takeover by the Chinese oil company because it would harm national security.

“I think it’s a mistake for the United States to let this go through from a security standpoint,” Mr. Hunter said after a hearing before his committee.

Cnooc’s bid was opposed by 73% of participants in a poll by the Wall Street Journal and NBC News. Only 16% support the acquisition and 11% weren’t sure, the Journal said.

Fu Chengyu, chairman of Hong Kong-based Cnooc, is attempting China’s biggest overseas takeover. Acquiring Unocal would more than double oil and gas output at Cnooc, which is 70% owned by government-controlled China National Offshore Oil Corporation.

“I am a bit worried that Cnooc is getting more desperate to get Unocal,” Anders Damgaard, who helps manage $3 billion, including Cnooc shares, at Sydinvest Asset Management in Aabenraa, Denmark, said July 12. “If they don’t get Unocal, I wonder what company they would go after next and at what price.”

Chevron’s cash-and-stock offer was worth $60.65 a share as of yesterday. Unocal’s board agreed to Chevron’s acquisition April 4. Cnooc bid $67 a share in cash on June 23. Unocal has said its approval of the acquisition by Chevron stands and Cnooc’s offer is being examined.

The April 4 agreement gives Chevron three days to respond to any higher offer that the Unocal board decides to support. A response in that time period would preserve Chevron’s right to take its offer to Unocal shareholders on August 10.

Chevron, which has all the government approvals for the merger, would complete the transaction soon after Unocal shareholders approve it. A Cnooc acquisition, by contrast, “would still face a complex and uncertain government review process,” Chevron Chief Executive David O’Reilly wrote this week in the Wall Street Journal.

“We have no plan to change our bid,” Chevron spokesman Donald Campbell said in a telephone interview on July 12. “We have the only merger agreement with Unocal.”

On July 1, the U.S. House of Representatives voted for a measure calling on President Bush to review Cnooc’s bid under the Defense Production Act of 1950. The resolution cited potential threats including a transfer of oil and gas output to Chinese control and technology with dual commercial and military use.