Chinese oil company CNOOC has abandoned its $18.5 billion bid to acquire US oil and gas producer Unocal in the face of strident political opposition.
The move clears the way for Unocal to conclude a deal with larger US rival Chevron.
CNOOC's all-cash offer in late June topped Chevron's $17.4 billion bid for Unocal, but the backlash in Washington from those wary of a Chinese government-controlled company taking over US oil assets all but sealed the deal for Chevron.
In a statement, CNOOC said: "CNOOC has given active consideration to further improving the terms of its offer, and would have done so but for the political environment in the US."
It described the political response to its offer "regrettable and unjustified".
Unocal shareholders are to vote on the Chevron offer on August 10th. If they approve the deal, it is expected to close as soon as that afternoon.
The company had no direct comment on CNOOC's withdrawal, except to say that it continues to believe a combination with Chevron provides the best value for shareholders.