A company controlled by the Chinese government has abandoned its takeover bid for U.S. energy firm Unocal because of "unprecedented political opposition."

CNOOC Ltd. pulled its $18.5 billion US cash offer on Tuesday, saying in a statement that the political opposition has created "a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction."

The company said its bid was worth $1 billion US more than the competing offer from Chevron, and it was prepared to raise its offer.

Although CNOOC had made it clear it wanted Unocal's Asian assets, and had promised to meet U.S. concerns, the opposition had not been satisfied.

The energy bill Congress passed last week delays a government review of CNOOC's bid for 141 days.

The company complained that efforts to change the U.S. rules governing foreign takeovers were "regrettable and unjustified."

CNOCC's statement said "we believe that the combination of CNOOC and Unocal would have created a strong and successful oil and gas company, focused on the fast growing Asian economy, to the benefit of our shareholders and the employees of both companies."

CNOCC, (NYSE:CEO) a NYSE-listed company, is 70 per cent held by China National Offshore Oil Corp., a Chinese state company.

Unocal's (NYSE:UCL) board backed Chevron's offer.