Chinese oil firm in Norway deal

The combined group would have 34 oil rigs, including those under construction

China Oilfield Services has agreed to buy Norwegian drilling contractor Awilco Offshore (AWO) for 12.7bn Norwegian crowns ($2.5bn; £1.3bn).

The deal is the first overseas acquisition for China Oilfield Services, which is a unit of China National Offshore Oil Corp (CNOOC).

The offer was a 42.4% premium above the closing price on 29 May, before AWO announced it had been approached.

AWO's board of directors has recommended the offer to shareholders.

China's oil companies have been trying to make acquisitions abroad for several years but have faced political opposition, as happened when CNOOC tried to buy Unocal of the US in 2005.

"China Oilfield has $1bn cash in hand. Its biggest problem has been there are no acquisition targets," said Lawrence Lau, an analyst at BOCI.

Earlier this year, China Oilfield's bid to buy the oil services firm STU from TNK-BP was blocked by the Russian government.