June 30 (Bloomberg) -- CNOOC Ltd. Chairman Fu Chengyu said he will do whatever the Bush administration requires to remove concerns that the Chinese company's $18.5 billion bid for Unocal Corp. is a threat to U.S. national security.

``We'll cooperate with the U.S. government,'' Fu said in an interview in Beijing today. ``We will meet all their demands.''

CNOOC, China's third-biggest oil company, last week outbid Chevron Corp.'s $16.3 billion offer in an effort to more than double its oil and gas reserves. Fu is facing opposition to the takeover from more than 40 U.S. lawmakers. House leaders plan to introduce measures today calling for more scrutiny and preventing the U.S. Treasury from approving a takeover by CNOOC.

Hong Kong-based CNOOC is 71 percent owned by state- controlled China National Offshore Oil Corp., which is funding $7 billion of the bid.

In a letter on June 24 to U.S. Treasury Secretary John Snow, 41 members of Congress requested a formal review of the bid by the Committee on Foreign Investment in the U.S., which scrutinizes the economic and security risks posed by foreign acquisitions.

``I'm confident that we'll have no problems in the review,'' said Fu.

Review

Any Bush administration review of the bid by CNOOC would be limited to national security issues and not be influenced by broader diplomatic and economic concerns, Snow said on June 28.

``We would look at this strictly on a national security basis,'' Snow said in an interview with CNBC television in New York. ``The national security interest of the United States will always be protected, I can assure you of that.''

The U.S. lawmakers also asked Snow to examine whether China's government is helping finance the purchase. Fu denied that CNOOC is tapping Chinese government funds to subsidize its bid.

China National Offshore will give CNOOC a 30-year loan of $4.5 billion at a rate of 3.5 percent, Chief Financial Officer Yang Hua said this week. The parent also provided a $2.5 billion, no-interest bridge loan, Yang said. The rate is less than the 3.75 percent the U.S. Treasury paid to borrow for three years last month.

Cash, No Debt

CNOOC's parent has about 20 billion yuan ($2.4 billion) of cash and no debt as profit from producing oil and gas soared because of higher prices, Fu said. The parent has unused credit lines for 140 billion yuan from Chinese banks at commercial market rates.

``The loan interest is not even one point less than any other commercial loans,'' Fu said. ``A lot of the politicians are thinking that the Chinese government is giving us the financing. That is not true.''

CNOOC will also borrow $3 billion from Goldman Sachs Group Inc. and JPMorgan Chase & Co., advisers on its offer, and $6 billion from Industrial & Commercial Bank of China, the nation's biggest state-owned lender, according to a company filing to the Hong Kong stock exchange on June 23.

Only the parent's loans are given at ``favorable rates,'' Fu said. ``All other loans are at commercial rates. When the parent borrows from the banks, it's at commercial rates. But when they lend us the money, they will give us some compensation.''

Unocal's Recommendation

Unocal ``continues to recommend the Chevron proposal,'' Joe Bryant, president and chief operating officer of Unocal, said today on the sidelines of an energy conference in Istanbul. ``We have only one signed agreement and that's with Chevron. But we are discussing CNOOC's bid.'' Unocal stockholders will vote on the Chevron bid on Aug. 10.

CNOOC assumed ``a very low price'' for oil in evaluating the profitability of the bid for Unocal, Fu said, declining to give the figure. Oil prices are likely to fall from current near- record levels, he said.

``For the long term, you just cannot assume a high oil price,'' he said. ``I don't believe the oil price will stay at the same high level in the next 10 years.''

Crude oil may average about $40 a barrel over the next two to three years and around $30 to $40 in the next three to five years, he said.

Oil rose to a record $60.95 a barrel on June 27 on the New York Mercantile Exchange. Oil for August delivery traded at $56.99 a barrel at 8:03 p.m. Beijing time.

To contact the reporters on this story: Loretta Ng in Hong Kong at lng13@bloomberg.net; Wing-Gar Cheng in Beijing at wgcheng@bloomberg.net.

Last Updated: June 30, 2005 08:17 EDT