China's CNPC in $4.2bn Canada bid

CNPC's PetroChina is well known to Chinese motorists

State-owned oil company China National Petroleum Corp (CNPC) has agreed to buy Canadian-listed PetroKazakhstan, which operates in Asia, for $4.2bn (£2.3bn).

The move is the largest foreign takeover by a Chinese firm and comes as the net importer of oil seeks to reduce its dependence on foreign-owned firms.

CNPC will pay 21% more than Friday's closing PetroKazakhstan share price.

Rival Chinese oil firm, CNOOC, recently failed in an attempt to buy US company Unocal because of political opposition.

Knock back

At the beginning of August, CNOOC withdrew its $18.5bn (£10.4bn) bid for Unocal, leaving the way clear for US firm Chevron to acquire the business.

Rapid growth in China's economy is driving demand for oil

CNPC's move for PetroKazakhstan still requires shareholder approval. It will pay $55 in cash for every PetroKazakhstan share.

Rapid growth is fuelling China's demand for oil and the country's thirst has helped push crude prices to a record.

Increasing car ownership in the country is another factor, analysts said.

Kazakhstan connection

CNPC's domestic petroleum exploration and production operations are mainly overseen by its largest listed subsidiary, PetroChina.

The company currently operates 13 large oilfields in China.

Analysts said the price CNPC paid for PetroKazakhstan was high but the deal made sense because China already had operations in Kazakhstan, including a huge oil pipeline linked to China.

"There is a clear logic for the Chinese in this acquisition as they further strengthen their position in Kazakhstan, whose output is growing fast and which controls 3.3% of global oil reserves" said Steven Dashevsky, chief analyst at Moscow's Aton Brokerage.