China National Petroleum Corp. agreed to buy PetroKazakhstan Inc. for $4.18 billion -- a deal that would be the largest overseas acquisition by a Chinese company but one that might be complicated by a planned counterbid by Indian investors.

A subsidiary of state-owned Chinese oil producer CNPC announced Monday that it struck an agreement to buy oil company PetroKazakhstan for $55 a share. PetroKazakhstan has its headquarters in Calgary, Alberta, where it was founded in 1986 as Hurricane Hydrocarbons Ltd. before changing its name in 2003, but it has operations in Kazakhstan's South Turgai Basin. Its shares trade in Canada, the United States, Britain, Germany and Kazakhstan. They closed up $8.34, or 18.4 percent, at $53.75 each on the New York Stock Exchange Monday.

The Chinese company beat a competing offer from a joint venture between ONGC Videsh Ltd., the international arm of India's state-controlled Oil & Natural Gas Corp., and an investment company owned by London-based steel billionaire Lakshmi Mittal.

An ONGC spokesman said late Monday that the Chinese company had won "very, very narrowly" and that the Indian joint venture is planning a counteroffer for PetroKazakhstan. He declined to provide details on the size or timing of the counteroffer.

The announcement of the Kazakhstan deal by CNPC came three weeks after another state-run oil company from China, Cnooc Ltd., gave up its efforts to buy Unocal Corp. of the United States. Cnooc withdrew its $18.5 billion offer -- higher than the winning bid by Chevron Corp. -- in the face of strong opposition from the U.S. Congress.

While Cnooc insisted its bid for Unocal was driven by commercial rather than political motives, CNPC is widely viewed as an instrument of Beijing policymakers. It is also far larger than Cnooc by almost every measure. Cnooc has about 2,500 employees, while CNPC's listed arm, PetroChina Co., employs 425,000 people.

The prospect of a bidding war for PetroKazakhstan -- a company some analysts say is already expensive at $4.18 billion -- says much about the determination of India and China to purchase foreign oil fields at a time when both their economies are starting to feel the pinch of record crude prices.

While less dependent on oil than developed economies such as the United States, India and China have found foreign oil playing an increasingly central role in their booming economies. Faced with stagnant production levels at home, India imports more than 70 percent of its crude oil requirements. It bought 95 million metric tons (693.5 million barrels) of foreign oil last fiscal year.

China's domestic production also is starting to reach a plateau, and the country imports about 40 percent of its oil. China's thirst for oil is especially acute: The country last year accounted for nearly one-third of the growth in global oil demand.

Though ONGC is starting to win lucrative contracts, officials there and at other Indian oil companies complain they are at a disadvantage to Chinese companies, which they say have access to cheaper loans and are better able to stomach the exorbitant costs of buying oil assets at a time of high crude prices.

As a partial solution, India has pushed for collaboration between Indian and Chinese national oil companies on selected bids. But a senior official at an Indian oil company said he didn't think it would lead to many joint bids soon.

"Both countries want all the equity oil and gas which is available," he said. "We can't suddenly become great friends."

In the pursuit of PetroKazakhstan, China has long held an edge over India. China is a customer for Kazakh oil, and together with KazMunaiGaz, the Kazakh state oil and natural gas company, CNPC is building a 1,000-kilometer pipeline linking some Kazakh oil fields with its own pipeline network, with work expected to be completed this year.

Asked how PetroKazakhstan would react to a counterbid from Indian investors, Jeffrey Auld, vice president and treasurer, said: "We are comfortable with the deal we've signed up to, we're committed to it, and we're certainly not soliciting for further offers."

Some big Western oil majors, including Chevron Corp., ENI SpA and Exxon Mobil Corp., have significant investments in exploration and production in Kazakhstan. But with Kazakhstan increasingly fearful of foreign, and in particular U.S., interference in its domestic politics, some analysts see little likelihood that another Western company will be able to gain a substantial foothold in the country once the Canadians depart.

Besides the planned counterbid from the Indian investors, there may be another hurdle for the CNPC deal. Under Kazakh law, the state has an option to purchase, at a market price, any major oil and gas venture if it is put up for sale. Western observers in Kazakhstan say this law could apply to PetroKazakhstan. "The preemption law can also be applied to traded shares in companies," a diplomat said.

Guy Chazan in Moscow and John Larkin in Mumbai contributed to this report.

Workers drill for oil near Aktyubinsk in Kazakhstan. PetroKazakhstan agreed to be acquired by a China National Petroleum Corp. unit for $4.18 billion.