China National Offshore Oil Company Limited (CNOOC) announced late Friday it has agreed to acquire U.S.-based Devon Energy Corporation's 24.5 percent interest in a South China Sea oil block for 515 million U.S. dollars.

Completion of the transaction is subject to Chinese government regulatory approval, according to a statement released on CNOOC's website.

CNOOC, the operator, will increase its stake to 75.5 percent in Block 15/34 once the deal is completed. The other partner, ConocoPhillips, holds the remaining 24.5 percent.

"This is a mutually beneficial deal for CNOOC and Devon," CNOOC President Yang Hua said.

Yang said that the transaction will strengthen the already solid position of CNOOC in offshore oil in China and create value for its shareholders.

Oil block 15/34 is located in the Pearl River Mouth Basin in the South China Sea, about 200 kilometers south of Hong Kong at a depth of 100 meters.

Production started in 2003 at Panyu 4-2/5-1, the major oil-producing field in Block 15/34, with current gross production totaling 49,000 barrels of oil per day, according to CNOOC.

Incorporated in Hong Kong, CNOOC is the listed subsidiary of China National Offshore Oil Corporation, China's largest offshore oil producer.