SAN FRANCISCO (AP) – By the time it was resolved Tuesday, the battle to buy Unocal Corp. had become more than a takeover tussle pitting Chevron Corp., the second largest U.S. oil company, against CNOOC Ltd., China’s third largest oil concern.

The showdown also underscored the stewing tensions between the United States and China, a pair of international powers, countries whose fortunes are becoming increasingly intertwined despite their vast cultural, economic and governmental differences.

San Ramon-based Chevron finally prevailed with a big helping hand from U.S. lawmakers, whose apprehensions about a U.S. oil company falling into the hands of a company controlled by China’s Communist government prompted Hong Kong-based CNOOC to withdraw its all-cash bid of $18.4 billion.

But it could turn into a Pyrrhic victory for Chevron – and perhaps even the United States – if China decides to use its increasing financial clout to retaliate for the political bashing of CNOOC.

“China is probably already thinking, “We don’t know how and we don’t know when, but we will get (Chevron) for this,”‘ said Oppenheimer & Co. analyst Fadel Gheit. “This will go down in the history books in China.”

For now, CNOOC’s retreat clears the way for Chevron Corp. to complete its acquisition of Unocal next week, even though its cash-and-stock offer is currently worth $700 million less.

Chevron had several factors working in its favor – regulatory clearance, the support of Unocal’s board and the political uproar over CNOOC’s bid.

CNOOC raised hackles in Congress because the company is part of the China National Offshore Oil Corp., which is 70 percent owned by China’s government. That connection raised concerns about whether a CNOOC takeover would threaten the United States’ economic and national security interests. Several lawmakers also criticized the government-backed financing that would have help CNOOC pay for its bid.

The political misgivings virtually ensured CNOOC’s bid would have to undergo a rigorous – and possibly tempestuous – review that would have prevented Unocal from being sold for at least another six to nine months, with no guarantee that the deal would ever be completed.

In a strongly worded statement, Hong Kong-based CNOOC said it might have raised its bid even higher, if not for the politics.

“The unprecedented political opposition … was regrettable and unjustified,” CNOOC said. “This political environment has made it very difficult for us to accurately assess our chance of success, creating a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction.”

Chevron spokesman Don Campbell declined to comment on CNOOC’s remarks, saying the company is focused on assuring a smooth transition after its Unocal acquisition is complete.

The marriage is expected to be consummated Aug. 10 when Unocal shareholders are scheduled to vote on the offer. CNOOC’s withdrawal from the bidding is anticipated to turn the vote into a mere formality.

Unocal spokesman Barry Lane said the company’s board remains convinced that it chose the superior offer.

Gheit agreed with Unocal’s rationale, given the uncertainties surrounding CNOOC’s bid. But he doubted a bid from another foreign oil company would have met such stiff opposition.

“If (Netherlands-based) Royal Dutch Shell had come up with an offer $2 per share higher, then Chevron wouldn’t be getting Unocal,” Gheit said. “Let’s face it: We are treating the Chinese completely different from most other countries.”

University of Maryland business professor Peter Morici believes different standards must be applied to China because the country hasn’t lifted its own restrictions on foreign investments and, until recently, refused to lift currency controls that has enabled it to build a huge stockpile of dollars.

“China is not playing by the same rules as everyone else,” said Morici, who specializes in international economics. “China serves its own interests and no one else’s. They are not into mutual benefits.”

Chevron is potentially vulnerable to Chinese retaliation because the company is already working with CNOOC on oil projects near China and Australia. Campbell declined to discuss how that relationship might change because of the tensions that flared in the Unocal tug-of-war.

“This deal is good for Chevron – it’s something they needed to do – but if I were Chevron, I would be calling up China right now, saying, “Come, let us reason together,’ ” said William Ferer, director of research for W.H. Reaves & Co., an institutional money manager.

Tuesday’s resolution pleased investors. Chevron’s shares gained $1.13, or nearly 2 percent, to close at $59.56 Tuesday on the New York Stock Exchange, where CNOOC’s shares rose $4.15, or 6 percent, to $73.49 and Unocal’s shares edged up 16 cents to $64.53.

With CNOOC’s bid gone, Unocal’s shares are likely to fluctuate with the value of Chevron’s bid, which was worth $64.41 per share, or $17.7 billion, after Tuesday’s developments.

Although Unocal’s shares have slipped from their recent 52-week high of $66.79, stockholders are still reaping a big gain from the El Segundo-based company’s decision to sell itself. The company’s market value has climbed by about $6 billion, or nearly 50 percent, during the past seven months.

Chevron initially agreed to buy Unocal in early April for $62 per share. Unocal – prized for its oil and natural gas supplies in Asia and the Gulf of Mexico – also had been negotiating with CNOOC and another unidentified bidder believed to be Italy-based Eni SpA.

After Chevron had already received all the required regulatory approvals to buy Unocal, CNOOC tried to break up the marriage six weeks ago with an all-cash offer of $67 per share.

CNOOC’s move triggered a political furor that reflected the United States’ concerns about China’s long-term ambitions in the world economy, along with its increasing consumption for oil – a thirst that has helped drive up prices during the past two years.

Many lawmakers also fretted Unocal’s oil drilling might have military applications that could some day be used against the United States.

Most industry experts doubted those concerns were well founded, but Morici thinks Congress raised legitimate issues. “I don’t know why we should give our oil technology or any other kind of technology to an authoritarian country like China,” he said.

Although he didn’t oppose CNOOC’s bid, Sen. Charles Schumer, D-New York, also criticized China’s treatment of workers and its resistance to foreign investment in its own country.

“The furor over China treating American companies and workers unfairly up and down the line is real,” Schumer said in a statement. “If China were open to American companies buying Chinese companies, I think CNOOC would have had a much easier time of it.”

Hoping to allay the fears about its bid, CNOOC had agreed to sell Unocal’s U.S. assets and promised to retain all of Unocal’s workers – something that Chevron is unlikely to do. Even as it dropped its bid, CNOOC reiterated Tuesday that its interest in Unocal was “purely commercial.”

Despite the prickly politics, Unocal’s board appeared poised to accept CNOOC’s offer until Chevron agreed to sweeten its offer two weeks ago.

CNOOC’s board had authorized a bid increase to $69 per share, but the company’s chairman, Fu Chengyu, declined unless Unocal agreed to pay the $500 million fee that would have been owed to Chevron if its bid lost out. Unocal refused, and reaffirmed its commitment to Chevron.