BEIJING - China's biggest state-owned oil firm has reached an agreement to buy a major oil producer in neighboring Kazakhstan for $4.2 billion - a victory in Beijing's campaign to secure foreign energy supplies for its booming economy.
The acquisition of PetroKazakhstan Inc., a Canada-based company, by a unit of China National Petroleum Corp., comes just three weeks after Hong Kong-based CNOOC Ltd. dropped its bid for Unocal Corp. following opposition from U.S. politicians.
The deal, which still requires the approval of PetroKazakhstan's shareholders, would be the biggest acquisition yet in a string of Chinese corporate takeovers overseas.
CNPC International Ltd. agreed to pay $55 per share - a 21 percent premium over PetroKazakhstan's closing stock price on Friday.
The price reflects China's desire to secure energy and to cement ties with Central Asia, said Paul Sampson, the senior correspondent for London-based Energy Intelligence Group, publisher of the industry newspaper Oil Daily.
"They see the need to tie up future energy supplies as a matter of national security, and so there is a certain logic behind this," Mr. Sampson said.
The fate of PetroKazakh- stan might not be sealed, however.
A joint venture of India's ONGC Videsh, a unit of Oil and Natural Gas Corp., and London-based steel billionaire Lakshmi Mittal might place a counter bid for PetroKazakhstan, Dow Jones Newswires reported, quoting an unnamed official at ONGC.
"This is not the end of the game ...The deal is still not wound up," the ONGC official said.
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