Two subsidiaries of China National Petroleum Corp (CNPC) have bought the 30 per cent stake owned by the Europ-ean Bank for Reconstruction and Development (EBRD) in two oil fields in Azerbaijan for $52 million as part of China's drive to diversify its resource base.

The deal represents an exit for the EBRD after a loan of up to $60 million to U.S. company Frontera Resources from the development bank for eastern Europe and the former Soviet Union went sour, which led to the EBRD acquiring Frontera's stake.

The EBRD declined to comment on how much of the funding had been disbursed but said it was happy with the transaction.

China National Oil and Gas Exploration and Development Corp (CNODC) and CNPC (Hong Kong) Ltd, part of China's largest crude oil producer CNPC, said yesterday they had signed two separate agreements to buy the stakes in the Kursangi and Karabagli fields.

"The investment in the largest existing onshore oil operation in Azerbaijan is a major step in establishing CNODC's presence in the high profile Caspian region," said Zhou Jiping, President of CNODC.

The Kursangi and Karabagli block is located in the onshore Kura Basin, which lies between the Caspian Sea and the Black Sea in Azerbaijan and Georgia.

Estimated reserves in the oilfields are 600 million barrels of crude oil and current output is 5,500-6,000 barrels per day.

The two other partners are Azerbaijan's state oil company Socar and Delta Hess, an alliance between Saudi Arabian Delta Oil and Amerada Hess Corp.

The block covers is approximately 470 square kilometres.

Three companies made the final cut for the bidding process, including east European oil groups, but the Chinese firms offered the best terms.

Chinese companies have become active in Central Asia, with investments in Turkmen gas, and are looking to developments in the region and in Russia to reduce dependence on Middle East oil supplies.

"This recent transaction solidifies our strategy of expanding our international operations and diversifies our reserve base into high potential areas," said Wang Mingcai, Executive Chairman of CNPCHK.