State-owned China National Petroleum Corp (CNPC) and India's Oil and Natural Gas Corp (ONGC) have provisionally agreed to buy a Canadian oil company's 37 percent stake in Syrian oilfields for 484 million euros (US$581 million).

The deal marks the first coming together to buy an overseas asset by the two oil giants from the world's two most populous nations.

Industry analysts said the purchase of Petro-Canada's oil stake is a change from the usual rivalry between the two firms.

Petro-Canada said in a statement yesterday: "We have reached an agreement to sell the company holding in Syria to a joint venture owned by ONGC and CNPC."

The Syrian sale is expected to be finalized early next year, the Petro-Canada statement said.

Liu Weijiang, a CNPC spokesman, yesterday confirmed the deal to China Daily but declined to comment further.

Petro-Canada, the third-biggest oil company in Canada, is increasing the proportion of its assets that have a relatively-long production life.

It is also keen to operate its own assets, Peter Kallos, executive vice president of the company, said in the statement.

"While these assets contribute a significant volume (to our output), they represent less than four percent of Petro-Canada's consolidated earnings from operations," said Kallos.

The Petro-Canada interest in the Syrian oilfields, the remainder of which is controlled by the Royal Dutch Shell Group, represents about 58,000 barrels of oil equivalent (BOE) per day.

Petro-Canada produced 13.1 million BOE from the Syrian fields during the first half of this year, the Canadian oil firm said.

Industry analysts said the deal would not significantly boost CNPC or ONGC's overall assets, but marks an important move in their business partnership.

CNPC earlier this year successfully bought Canadian-registered PetroKazakhstan for US$4.18 billion, out-bidding ONGC.

Zha Daojiong, director of the Centre for International Energy Security at Renmin University of China in Beijing, said the Syrian deal does not mark a national policy shift from competition to partnership, but comes more from the activities of the two companies.

Oil firms from developing countries are now challenging internationally-established oil giants such as ExxonMobil and Shell in their search for oil reserves around the globe.

These firms aim to become "oil business operators," companies that do not only produce oil, but also own reserves that are strategically-important to a country's energy security.

"It represents a sign of things to come," Zha said.

(China Daily December 22, 2005)