China National Petroleum Corp. buys PetroKazakhstan

China's biggest state-owned oil company says it has reached agreement to buy a major oil producer in neighboring Kazakhstan for US$4.2 billion (Ђ3.4 billion) - a major advance for Beijing's campaign to secure foreign energy supplies for its booming economy.

The announcement by China National Petroleum Corp. comes just three weeks after state-controlled CNOOC Ltd. dropped its bid for Unocal Corp. following opposition from U.S. politicians.

As told earlier, the purchase of Canadian-based PetroKazakhstan Inc., which requires approval by its shareholders, would be the biggest acquisition yet in a string of Chinese corporate takeovers overseas, the AP says.

CNPC International Ltd. agreed to pay US$55 (Ђ45) per share - a 21 percent premium over PetroKazakhstan's closing stock price on Friday.

The high price reflects China's desire both to secure energy and to cement ties with Central Asia, said Paul Sampson, senior correspondent for London-based Energy Intelligence Group, which publishes 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," Sampson said.

The fate of PetroKazakhstan may not be sealed, however.

A competing bidder - a joint venture between India's state-run Oil and Natural Gas Corp. and London-based steel billionaire Lakshmi Mittal - is deciding whether to make a counteroffer, ONGC's chairman said Tuesday.

"We lost very narrowly," chairman Subir Raha told The Associated Press. "We are in touch with our bankers. We are assessing options."

The Indian company had reportedly put in the highest bid in the first round at US$3.9 billion (Ђ3.2 billion) bid, but the deal swung in favor of the Chinese, who later improved their offer.

China is trying to increase its role in Central Asia in part because of unease at the presence of U.S. forces in the former Soviet region that borders Afghanistan.

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