The Unocal board met in California at the weekend and decided to continue considering the government-backed Chinese oil company's offer if certain conditions could be met.

But analysts said endorsing the rival offer from fellow Californian company Chevron was still an option for Unocal, particularly as Chevron could be expected to increase its US$16.8 billion bid as the August 10 deadline approached for the Unocal shareholders vote.

However, it would be hard for Chevron to compete with CNOOC on financing terms, considering the low and zero-interest loans available to CNOOC from Chinese-government entities.

The Unocal board only received the formal CNOOC proposal last week and has now met twice to weigh that offer.

So far, the Unocal board has been adept in playing competing bids off against each other. CNOOC was the first to approach Unocal last December, with a US$13 billion offer for its Asian assets. That move prompted Chevron and Italy's ENI to put up competing offers.