A Chinese state-run oil company is offering to buy U.S.-based Unocal Oil for $18.5 billion in cash, more than a rival offer by U.S.-based Chevron Corporation.

The deal would more than double the oil and gas output of China National Offshore Oil Company and increase its reserves by more than 80 percent. The company says such a sale would not hurt U.S. markets.

Chevron says it stands behind its merger agreement with Unocal, which has been approved by the Federal Trade Commission. Chevron warned that a merger with a Chinese firm would be subject to extensive U.S. government regulatory review. A competing company would also have to pay Chevron a $500-million fee if it broke up the Unocal-Chevron deal.

Some information for this report provided by AFP, Reuters.